Late payment remains an issue for small businesses as they struggle to stay afloat in the UK’s unpredictable economy. While the UK’s SMEs are still feeling the pinch, they are adopting a back to basics approach to credit control in a bid to ease the pressures of late payment, according to research.
The research, which surveyed 247 business owners during January 2012, found SMEs are taking a more proactive stance in order to stay on top of their credit management and reduce the likelihood of late payment. Set against a backdrop of the challenging economic climate, there has been a significant rise in the use of constant reminding (69%), suspending work and services (47%) and writing to debtors (45%). Other popular credit management strategies include credit insurance (15%), while almost half (47%) are credit checking new customers.
Businesses are now waiting an average of 17 days beyond their agreed credit terms to be paid by their customers, five days sooner than in the preceding six months to July 2011. There was also an encouraging fall in the age of respondents’ debtor books, with 66% now classifying less than 10% as more than 90 days old, up from 57% in July.