Previously, we discussed the outstanding rise in late payments, the increasing occurrence and the lengthy process to resolve the issue. It is now imperative to address the empirical implications that come with late payments, the figures that can put companies out of business and the detrimental facts that this frustrating fad holds.
The importance of acknowledging and avoiding conducting business with companies that are responsible for frequent late payments of commercial debts is ever-growing. For example, "Latest research, from the people behind Direct Debit and Bacs Direct Credit, shows that the cost of recovering overdue money is now at an average of £9,000 for each business [per annum]." - Bacs Payment Schemes (Bacs).
Late Payments of Commercial Debts
It is outstanding that businesses have to fork out from their own wallets in order to receive money that they rightfully own.
Beyond the fact that it potentially takes months of chasing up payments to gain some sort of clarity, the fees for the entire process are constantly rising, the longer the process the greater the fee. In the UK alone, it is estimated that the total late payments bill in 2017 was £14 billion! The magnitude of this issue is much bigger than addressed, it does not stop at the UK and actually spirals into a global phenomenon. For example, the UAE has been experiencing major increases to the duration of late payments, which, subsequently, dramatically increased the cost of chasing up late payments. In 2015-2016, the UAE saw over 200 debtors fleeing the country in order to avoid paying debts.
Due to the magnitude of globalisation, a domino effect takes place within the late payments culture. If company A is waiting for payment that is long overdue, it will affect their cash flow and, thus, force them into delaying payments. This chain reaction can put many companies out of business.
Cooperation for Success - With Cedar Rose
In our previous article Late Payments: Looking out for the Underdog there was a new initiative mentioned that would significantly reduce the late payment culture and Cedar Rose has finalised and perfected this under the name of 'Trade Rate'. Trade Rate allows you to share your voice and have your say on late payments through a scoring system.
This can warn other interested parties of late payers or as a company that pays on time from those who have actually had experience trading with them. All businesses who participate can then reap the rewards of cooperation and know when to trade on secure terms. All you have to do is search for the company on our website and give a star-rating depending on how your experience of doing business with them went.
The ultimate aim for this initiative is to help SMEs who are often at a greater risk of late payments than larger enterprises. Although, you may be faced with a dilemma, what if the company you are looking for doesn`t exist in our 11 million+ companies database?
The answer is simple, you can order a credit report on them, not only will you be better informed as to their current financial standing, but you will have the opportunity to add your rating as soon as the report is received. Work with Cedar Rose and help stamp out late payments once and for all. Cooperation is the key for success.
Late payments of commercial debts are a problem for businesses of all sizes. To find out how you can protect your business from late paying clients, give us a call today on +357 25 346630 or email email@example.com