How the pandemic has affected payment of invoices

According to latest estimates, around half of businesses in the UK and Ireland (as a part of a survey response) have said that the ongoing pandemic has affected payments. According to the estimates, approximately two-fifths of small to medium businesses have said that they are experiencing increased delays in invoice payments.

Cash flow, problems in sourcing additional working capital and late payments are the top three concerns among small to medium businesses are now reporting.

As the UK and Ireland continue to brace themselves against the full impact of the pandemic, the effects of which we are yet to fully appreciate, businesses are taking steps. The steps include measures to minimise any negative impact on their ability to continue trading and of course protect their cash-flow.

Invoice recovery

Unfortunately, there is an inevitably during challenging times that businesses will opt to withhold invoice payments. This, naturally, has a negative impact on all businesses connected with them. From other companies whose invoices will be paid late also, and from there, their ability to pay their own bills both at work and at home.

As more staff are forced into isolation, and unable to work from home, SMEs are finding it more difficult to reach their accounts departments and, from there, those responsible for paying invoices.

All of this together will have a negative and serious impact on supply chains, across England and Wales, as well elsewhere of course. Cash-flow problems for the worst affected companies are inevitable.

  • Getting your invoices paid in the middle of a pandemic

Even during ‘normal’ times, a massive 78% of companies admit to paying their invoices late. This can cause headaches for small to medium businesses at the best of times, but during a pandemic and the financial pressures that come with it, this can be a veritable nightmare.

There a few things that can be done, to help improve your chances of getting your invoices paid in the future. The most obvious step is increasing your payment deadlines. In the current climate that we find ourselves in, it can be important to be a little more considerate than perhaps is usual.

In the normal run of things, adding a late payment fee is commonplace but under the circumstances, it may be best to simply extend the deadline and forgo the fee.

This will do two things:

  • Allow your customer a little more time to pay, taking the pressure off of them
  • Maintain a friendly relationship

If late payment is unusual, and you have a dialogue with them, this is by far the better option. Another option is to offer incentives in order to encourage invoice payment.

When you are working with a slow-paying client, offering a discount for early or even on time invoice payment can wonders. However, you should be careful if going down this road and how you decide to structure the offer.

You certainly do not want to offer too much in a discount, this could have a negative impact on future discussions regarding pricing and payment.

Things can be mitigated

Debt recovery agencies are usually the last option, and plenty of time needs to be given to customers. Setting up reasonable pricing and payment structures, and making sure that customers understand them before work begins, is going to help you a lot later down the line.

Businesses are going to be hit, one way or the other, but with careful planning then they can avoid becoming a business casualty.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>