Member Article

Late payments hitting North East SMEs

SMEs in the North East and Cumbria are suffering cashflow problems due to late payments, research by Lloyds TSB reveals.

76% of businesses surveyed in the bi-annual Business in Britain report cited late payments as the cause of financial worries, which is significantly higher than the national average of 60%.

Across the 1,800 firms to take part in the survey, the number experiencing cashflow problems had increased by 10%.

Nick Robson, regional director for Lloyds TSB Commercial Finance in the North East and Yorkshire, said: “The rise of companies affected by late payments has increased by nearly a third over the past six months, a worrying statistic and one which all business owners should take note of.

“By chasing invoices and credit checking potential customers, firms can help to ensure they are not adversely affected by late payments.”

The construction, manufacturing and professional services sectors were worst hit, and Lloyds TSB Commercial Finance, the invoice finance arm of the bank, expects the number of companies affected by late payments to rise as economic uncertainty continues to restrict working capital.

Mr Robson added: “The economy is tough at the moment, but there are growth opportunities emerging and companies should ensure they are in the best possible position to capitalise on these.

“We expect to see invoice finance and, in particular, factoring, increasing in popularity in 2012 to combat the problem of late payments and the knock on effects it inevitably has on a firm’s day to day liquidity and future prospects.

“Factoring, which advances the value of a company’s issued invoices, also has an in-built credit control function.

“This is particularly relevant for SMEs, as smaller businesses often lack dedicated financial departments, which can mean any help chasing invoices is welcomed.”

This was posted in Bdaily's Members' News section by Tom Keighley .