How to prevent late payment frustrations

Monday 18 April 2016

Working with a limited company accountancy support service can help contractors to better manage their finances and improve their understanding of their company's cash flow.

As a result, small businesses can prevent themselves falling victim to the late payment troubles that blight many such companies. Late payments from clients to contractors can leave SMEs struggling to make other payments themselves, compromising their reputation and their compliance with HMRC.

By allowing a third-party such as Brookson to help with their finances and paperwork, contractors can see more clearly when they may be being messed around by clients, enabling them to say goodbye to the frustrations that often surround late payments.

Research carried out by ACI Worldwide in conjunction with YouGov led to the discovery that 48 per cent of small and medium-sized firms in the UK are often frustrated about the time it takes payments from their clients to reach their business bank accounts.

It was found that one-third (33 per cent) of SME owners have experienced difficulties in meeting their own financial obligations due to late payments. Ten per cent explained that receiving money in a timely fashion is vital when it comes to paying for business essentials, such as day-to-day equipment, product development and research.

What's more, 17 per cent of small businesses believe delayed payments have had a negative impact on their staff retention and attempts to recruit new employees, highlighting just how detrimental the late receival of money can be to smaller companies.

Barry Kislingbury, director of solution consulting and immediate payments at ACI Worldwide, commented: "For small businesses, delayed and unpredictable cash flow can significantly affect their success. Our research presents a great opportunity for banks working with these businesses to demonstrate the value of their real-time payments offering. This will not only help them grow in the medium term, but will also strengthen the overall economy in the future."

The UK government introduced new rules surrounding late payments in 2015, giving small businesses the power to issue fines to other companies if they did not get owed money to them within the agreed window.

Meanwhile, 64 per cent of respondents to the ACI Worldwide survey said they felt mobile and internet banking options had been beneficial for their business, allowing them to enjoy improved visibility with regard to their finances - something that Brookson's limited company accountancy services also allow.

By Victoria McDonnell

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