Ralph Morton
editor

Living with business cars - what's good, brilliant, or downright irritating. You'll find it all here, plus a bit more. There's commentary on company cars, company car tax, contract hire, car leases, the car industry - in fact, anything to do with running a business car or a small business! And you can add to the debate, too, with your own comments.

You can also subscribe to the BCM RSS Blog Feed

I DON'T know how you're finding the economic climate at the moment. As far as Business Car Manager goes, I feel quite upbeat about things - particularly in the light of how I was feeling in Q4 2009. Not that I'm complacent. Far from it. The pressure is still really on. And the hours I'm working to make it happen are ever increasing.

But how have you found getting paid by suppliers? Generally, I find small businesses pay really well. There are some exceptions of course. But generally, because small businesses know the impact of delayed payments, they pay on the nose. I certainly do at Business Car Manager.

It's always the big companies that are the problem. Or media agencies (but that's often the same thing). And it's usually a combination of holding onto funds to enhance their cash flow; or bureaucratic incompetence. Or both.

I recently received payment from a commercial venture that we were involved in that was shelved in 2008 - without completing the schedule. I tried to be as responsive as possible; suggesting different solutions to the problems the company was facing; being as flexible as possible - the company was a number one in its market. But to no avail. Finally, just last month, I received payment for a cancellation fee...that's some 18 months after the original schedule was supposed to have finished its initial agreement period.

So it came as no surprise to see this report from NatWest and RBS suggesting that the late payment mountain faced by SME businesses had grown to £62.87 million.

Apparently, new research from NatWest and RBS has found that 71% of SMEs in the UK have suffered from late payments over the last 12 months, with the collective value of invoices paid outside of the stipulated terms and conditions estimated at £62.87 billion. As a result, 235,000 SMEs claim time wasted chasing debt has adversely affected their business.

Although larger companies have a higher value of invoices paid late, as a proportion of turnover it is smaller businesses which are worst affected reckons NatWest. For example, one in five (20%) businesses with an annual turnover of between £250,000 and £500,000 had suffered. This compares with just one in 15 (7%) of medium and large businesses. For businesses with a turnover between under £1m, the equivalent of 12% of their annual turnover was paid late according to the research.

Despite these problems, the research found that less than half (45%) of SMEs have taken measures to improve their cash flow. Of these businesses, around one in 10 (11%) had hired an in-house credit controller. Only 9% had used invoice discounting and 8% had used factoring, both possible - if expensive, let's face it - means of plugging a cashflow gap.

Peter Ibbetson, chairman small business, NatWest and RBS, said this about the findings: "Bad debts and late payment of invoices are endemic problems for UK businesses. For more than one in 10 (12%) firms, over 60% of all their invoices are paid late, causing major cash flow problems for many. What's concerning is that so few are making use of services from their bank to help alleviate the problem."

Well, that might be the case. A simpler answer, of course, is for companies to pay on time. And, in my experience, banks aren't always whiter than white when it comes to prompt payment either. I have worked for an RBS subsidiary and while some invoices were met on time, that wasn't always the case. At times it really stressed the business.

What I'd like to know from you is this: do you, as a small business, regularly suffer late payments? Let me know - use the response mechanism below.

TAGS: late payments, NatWest