Reports that business confidence is now at its highest level in 20 years have been borne out by the latest late payment analysis from Lovetts Plc, they have found that based on the volume of invoices being issued and now being chased for payment, businesses have got busier, since Q1 2014, but are also battling late payment as the number of bad debts on their books has jumped by almost a third.
Compared to Q1 2014, the total number of debts Lovetts’ businesses had on their books increased by 27% on the previous quarter. Such a significant upturn in the number of debts is a strong indication of a corresponding upturn in orders/sales. While this supports reports of a boom in business prospects it shows that late payment is becoming increasingly widespread, despite Government attempts to tackle the issue.
Charles Wilson, CEO of Lovetts says: “The huge increase in the number of commercial debts on businesses’ books in Q2 2014 vs Q1 is a sign of a busy sales ledger which is good news but also something that needs to be managed very carefully. It’s all well and good bringing more business but not if it means more time chasing up customers to get invoices paid.
“It is crucial businesses take control of these debts as the economy recovers with robust credit control policies and late payment tools such as a Letter Before Action or Late Payment Demand to show you mean business when it comes to chasing debt. Our analysis shows that businesses are acting quicker than they were in Q1 to commence legal action to recover a debt but they are not acting quite so fast when it comes to the initial chase with a Letter Before Action. This works in 80% of cases, reducing the need to make a claim through the courts.
Our comment: robust and efficient Credit Control will help not only your cash flow but give you early warning of any clients who may have issues regarding payment.