Credit management firm e-bcm is urging more SME resellers to consider the option of factoring as a way of solving late paying customer headaches.
As has been widely reported in the industry, late payments and bad debts are putting VARs at increasing risk of collapse (CRN, 5 March). A survey of visitors to the UK Business Forums web site revealed that 32 per cent were concerned about late payments and the knock-on effects this can have on cashflow and business in general. Furthermore a survey from Experian discovered that businesses are taking an average of more than two months to pay their bills - an increase of almost two days since 2006.
Dennis Scott, commercial director at e-bcm, said: "We have a real problem in the UK at the moment and it’s one that appears to be ingrained in our business culture. We simply don’t pay people as quickly as we should and that causes problems with cashflow and business viability. It is time perhaps, that small businesses in particular accepted that and looked at alternative remedies.”
One solution to the late payment scenario is to factor all debts out to a specialist supplier, added Scott.
“Factoring is well-established and very effective," he said. "It brings the money in straight away and enables someone who is experienced at the job to chase up the debt. That frees small businesses from the dual burdens of having to chase up late payments and having to extend overdrafts or borrow money to cope with a sluggish cashflow.”
Further Reading:
Comments