February is revealed as the worst month for cash flow

Ahead of the new payment directive deadline in March, Hitachi Capital Invoice Finance has announced that the last week in February, is the worst week for collecting invoice receipts throughout the whole year. Figures suggest that small businesses are owed more than £36 billion as result of late payments, and this is backed up by new February payment data.

John Atkinson, head of commercial business at Hitachi Capital Invoice Finance, said: “Last year February was our lowest level month for collections and payment, 15% less than the monthly average, as the movement of finances saw a dramatic slowdown in terms of collections. Clients hold off paying until after the first week of March, which gives them an additional month’s credit, but can severely affect the businesses at the end of the payment chain. This effectively creates a domino effect, potentially crushing the hard-working SME sector.

“The Government sees SME entrepreneurs in the private sector as key to the recovery, but clearly many businesses underestimate the length of time it takes to receive remittances. 2013 has already been a tricky start for a lot of businesses, as we have seen many retailers fall under, combined with low seasonal sales, poor weather and a shorter month in February. This takes its toll on small businesses’ cash flow. We want to highlight these payment issues as a warning to SMEs and to urge prompt payment to stop the domino affect crushing the life out of the recovery.”

With economic growth a priority, the European Commission recently launched an information campaign to encourage speedy incorporation of the Late Payment Directive into national law in March. The new guidelines are designed to support SMEs during difficult times, and to put a stop to the culture of late payments.