Late payments not better for battling firms
Company collapses are likely to proliferate in coming months as the number of businesses delaying payment on their bills continues to increase, heaping more pressure on the struggling small business sector.
Given the standard repayment term is 30 days, this lengthening of the due payment repayment is likely to push more companies to the wall.
By contrast, in 2003 the average term was 45 days and before GST was introduced in 2000 it was 41 days.
Payment trends are known to be an accurate leading indicator of an economic correction. Indeed, the last economic decline was preceded by a blowout in trade payments. The concern is that as the global credit market again tightens, and funding is harder to obtain, the impact of later payments will have painful consequences for many firms.
According to the latest Dun & Bradstreet Trade Payments Analysis – examining the ability of firms to pay their bills, and pay them on time – the number of payments falling within the standard 30-day term dropped 16.5 per cent quarter-on-quarter.
Strange Random Payment Quote:
The payment of debts is necessary for social order. The non-payment is quite equally necessary for social order. For centuries humanity has oscillated, serenely unaware, between these two contradictory necessities.” – Simone Weil (French social Philosopher, Mystic and Activist in the French Resistance during World War II. 1909-1943)
- All firms ‘should work for prompt payments’ (premierlinedirect.co.uk)
- Payment processing for small businesses (creativeagencysecrets.com)
- Late payments ‘top small business insurance holder worry’ (premierlinedirect.co.uk)
- Small business wants new credit, debit, payment rules (cbc.ca)
- Business insurance news: Late payments ‘destroying’ small firms (premierlinedirect.co.uk)
- Value Investing: Dun & Bradstreet’s Wide Moat, Low Price (seekingalpha.com)
Posted on July 19, 2012, in Article and tagged Business, Discounts and allowances, Dun & Bradstreet, Financial Services, Insurance, Merchant Services, Payment, Simone Weil, Small business, Supply chain. Bookmark the permalink. Leave a Comment.