Late payments left UK manufacturing firms £10.3bn out of pocket in 2011

Late payments left UK manufacturing firms £10.3bn out of pocket in 2011 according to direct debit organisation Bacs. The 2011 sum owing to manufacturers represents a significant rise on 2010 when £8.9bn was recorded as outstanding due to late payment. On average Bacs calculates that across manufacturers in expectation of late payments around £43,000 is outstanding for each company. In 2010 this figure was £38,00. According to a sector survey by Bacs, more than half of the UK’s manufacturing base experience late payments and 15% admit to being “very worried” about the consequences. An average of 29 days, in addition to the commonly expected 30 day payment period, are commonly added to payment periods according to Bacs. This leaves many firms waiting for two months before receiving payment for goods and services. Bacs says that the most frequent excuse businesses in the manufacturing sector give for late payment say they hear is that the hold-up is due to internal systems – 54% of those awaiting payment are told their invoice is waiting for authorisation. According to global trading organization GXS e-invoicing could solve many late payment woes. Nigel Taylor, head of e-invoicing at GXS explains: “Electronic invoicing is a key initiative to ensure invoices are paid on time. Automating the process allows for transparency and simplification, and the financial rewards of e-invoicing help to reduce processing costs from Eu17.60 to Eu6.70 – a 62% saving per invoice processed.” Mr Taylor continued: “Manufacturing companies may have work to do to remove a reputation of poor payers, in the UK at least. However, there is significant interest in the opportunity of electronic invoicing within industry groups like Odette and EDIFICE, which demonstrates that manufacturers are beginning to embrace the benefits of e-invoicing.” Mike Hutchinson, head of marketing at Bacs, says the issue of late payments is damaging to manufacturing firms which are relying on good cash flow to keep going through the fragile post-recession recovery period. “The problem of late payment is clearly getting worse for SMEs in the manufacturing sector,” he says. “We urge SMEs working in the manufacturing sector to look at what payments can be automated to help them assert more control over their cash flow, and hopefully alleviate some of that stress on the business and its owner,” Mr Hutchinson concluded. Published : 23 Feb 2012 9:36 am by Jane Gray Care of The Manufacturer