If so, you are not alone. In the second quarter of 2018 the manufacturing sector saw debt owed to suppliers increase by 206.3% to £98M! If your main customer base is within the manufacturing sector, pay special attention to these customers, chase your invoice as soon as it becomes due. Ideally use company monitoring services to keep up to date with the financial status of your customers.
The issue isn’t just with the manufacturing sector. There are pockets of bad debt across every sector. The statistics for Q2 of 2018 give the impression companies are paying promptly with a 60% decrease in debt owed by businesses to their suppliers to £829.8M (which is still a huge amount of debt).
However, overall there is a 30.2% increase in debt owed to businesses. It’s when these invoices are paid that it is a real concern. Currently the average is 16.4 days beyond the payment terms agreed. For some having to wait longer than agreed to receive payment can break a business or cause cash flow issues. Others reduce their terms to ensure payment is made within a period comfortable to prevent cash flow issues.
I suggest that your payment terms are reviewed regularly, and if necessary amended to reflect your business and customer needs at the time.
Mercian Law can help with creating new or amending existing terms of business for £500 + VAT. Or, we can help chase any overdue invoices for £25 + VAT
Take a look at our fees and contact me with any queries.