And in a world where making payments has become a major issue, the pain will be felt by businesses.
People often take advantage of someone’s good nature when making payments and, whilst you might want to give someone the benefit of the doubt and sympathise, it’s hard not to get taken for a ride.
Shockingly, whether it’s a genuine reason or a blatant refusal to hand over the cash, only 51 percent of invoices are actually paid on time.
For obvious reasons, late payments are a killer for smaller companies, but recent research conducted by Ultimate Finance, a leading UK funding partner to the SME market, revealed that it’s also a big problem for growing companies too.
Whilst 82 per cent of SMEs are owed up to £25,000 in late payments, medium-sized companies with 50 employees or more are owed up to £30,000.
Unsurprisingly, of the businesses asked, 94 per cent stated that late payments were causing cash flow problems. Companies that are thriving and doing well enough to grow their profits and in turn, its team of employees, shouldn’t be held back and punished by something that’s so easily avoided with a bit of organisation and money management.
Whilst we can’t blame everything on not getting money on time, late pay is something I have first-hand knowledge of. While the banks were the primary reason I almost lost everything in the early 1990s, having a load of money owed but not coming in really put the screws on me.
And, for one small business, even just one big debtor who doesn’t cough up the goods for six months, or a couple holding out making payments for more than 90 days, can be a death sentence when there are bills and wages that need to be paid.
We need an active solution and government intervention to ensure that payments are received when they should be.
Companies may be able to reach agreements to vary such a law among themselves, but as a general rule if you can pay and don’t, then you’re liable, and should be held accountable.
Quite frankly, being bankrupt and continuing to trade is just plain immoral.