A blog by Martin Williams, external affairs spokesman of Graydon UK, focusing on business risks - from fraud to late payment. Martin has has spent the last 35 years in the credit information industry, and has been with Graydon UK, one of the top five commercial credit agencies in the UK, for the last 20. Apart from his PR duties, he teaches credit analysis to risk professionals and helps educate SMEs on the importance of maintaining a good credit rating. Martin is a Fellow of the Institute of Credit Management and is a sitting member of the Institute's Think Tank. He was also honoured by Credit Today, after being included on their Credit 100 list of people who have had the greatest impact in the credit industry during 2008, 2009 and 2010.
|
|
18 Jan 2010
Over a year ago, cash strapped small businesses were given a pledge by Lord Mandelson stating that Government departments would pay trade invoices within 10 days. Research recently carried out by Graydon amongst 320 companies supplying government departments says that 98% fail to get their money within the promised time frame. Worse, some 60 odd percent say they are paid later than 30 days after the invoice date.
Was this government pledge another example of government rhetoric aimed at calming the nerves of the business nation in the midst of a severe recession, without any real hope of proving deliverable?
Some would argue that this policy follows in the footsteps of the Top up Credit Insurance scheme and the Enterprise Finance guarantee Scheme- other "Made in Recessionary UK" products that really failed to deliver what they were meant to, to help the country through the downturn.
All these government initiatives, whilst laudable in conceptual terms, have clearly demonstrated that government machinery does not readily respond to the demands made of it by its bosses, and brings to mind the rather amusing antics of the senior civil servants in that never to be forgotten comedy series "Yes Minister". The PM and his cabinet colleagues may think they're in charge, but who really pulls the strings of power in this country of ours?
Visitor comments
Hi Martin,
Late payments can have a huge impact on smaller businesses and inefficient invoice processing can be one of the main causes of public bodies and local authorities failing to achieve the ten day timescale.
Many public and private organisations still rely on traditional invoice processing which can slow down the workflow considerably and involve significant resource; a recent survey revealed that nearly 40% of all suppliers to local authorities could only submit invoices via paper indicating that manual processes are still in use. As a result, local authorities have to handle huge volumes of invoices by hand which can result in an unacceptably long time to process payments, resulting in the disastrous impact on cash flow for an SME.
By automating the invoice flow, local authorities can speed up the processing of one payment from two days to just 30 minutes, making the 10-day requirement deadline much more achievable. Savings can also be made by reducing the resource needed; 25 people processing 10,000 invoices per year manually would just need two people with an automated approach.
It’s a relatively small, and cost-effective, change that can transform the internal processes within an organisation within in weeks and positively impact the many SMEs out there awaiting payment.
Regards,
Simon Shorthose, MD, ReadSoft
Posted by: Simon Shorthose , 25 Jan 2010
Hi, thanks for this post. Very instructive. However I'd like to say that 'Invoice Factoring' actually works for me. I find it a cost-effective way of outsourcing my sales ledger while freeing up my time to manage my business. When you re running a small business like mine, this can be a life-saver...
Posted by: Invoice Factoring UK , 31 Mar 2010
Frances Coppola on Sort out the credit sloths
TaxTeddy on EU ding dong over accounts filing Exemption
martin williams on Insolvency stats are head-scratchingly strange
Robert MMoore on Insolvency stats are head-scratchingly strange
slightly optimistic on PIGS Keep Europe in an Economic Trough
Search thousands of financial jobs:
Search thousands of financial jobs:
Adding your comment