Wylie & Bisset urges SMEs to tackle late payment through automation
While welcoming the UK government’s plans to launch more stringent initiatives to curtail the persistent problem of late payments to SMEs as a step in the right direction, Wylie & Bisset, accountants and business advisers, noted that the initiatives apply only to larger businesses with a turnover in excess of £10 million.
Mark Mulholland, partner in the firm’s Business Advisory department, said that while the forthcoming Prompt Payment & Cash Flow Review aimed at reinforcing and better executing current policies to ensure timely payments for small businesses is welcome, SMEs would be better advised to seek to do business with regulated sectors, such as Housing Associations, where there are rules and regulations about late payment.
He said: “I’d recommend SMEs tackle late payment by automating the payment system as much as they possibly can.
“It’s all about using technology, apps and cloud systems to automate the system and chase up payments. And some SMEs might consider offering early settlement discounts on their invoices.”
Mr Mulholland also advised SME business owners to bear in mind the old adage ‘don’t be a busy fool’.
He added: “When taking on new customers, SMEs would be advised to do some due diligence beforehand to ensure that the customer has sufficient reserves.
“And they might consider using credit control agencies to make sure there’s no risk of not getting paid before they even start.”
Last year SMEs faced outstanding late payments averaging £22,000. By fostering a healthier payment culture, the UK economy could see an uplift of £2.5 billion annually.