British corporates are worst offenders in £24 billion late payment debt

According to bacs research done by BDRC Continental, British companies are the worst payers. To those of you waiting for payment, this will come as no surprise. But can we afford to let that continue? By putting your customers on Direct Debit, you control the payment frequency and date, eliminating those cash flow issues that come from late payers.

British corporates are worst offenders in £24 billion late payment debt

Government and not-for-profits pay on time

*33% of SMEs say corporates don’t pay on time

*Payments delayed by up to 52 days

* Late payment from public and third sectors improves

* 158 million man hours lost to chasing overdue bills

* Half Britain’s SMEs fall victim to late payment

*£27,000 - average amount owed

Large corporates are responsible for many of the late payments making up the massive £24 billion owed to British small and medium sized enterprises (SMEs), according to research from Bacs, the organisation behind Direct Debit and Bacs Direct Credit.

But, in contrast with the commercial sector, the public and third sectors are meeting more of their bills on time – SMEs experiencing late payment on invoices to government and not-for-profit organisations almost halved from 11% to 6% in the last six months of 2010. 

Bacs newest late payments research shows a third of SMEs reporting that big businesses are behind late bill settlement. And those operating in the manufacturing industry are most likely to suffer delay at the hands of the big corporates, where 41% of the sector's SMEs experiencing late payment said large companies were to blame for overdue invoices.

More than half (53%) of the country’s SMEs have experienced late payment – that’s up from 45% in June 2010 - with the average owed at any one time standing at £27,000. And when SMEs do finally get paid, the length of time they’ve had to wait is an average of 39 days beyond agreed payment terms, an increase of nearly eight days since June 2009. That rises to almost 50 days within the distribution sector, while businesses in the North are waiting an average of 52 days longer than anticipated – that’s almost two months.

The burden of chasing overdue invoices is also impacting on smaller British businesses, as they’re forced to spend an average of ½ a day every week pursuing payment. That equates to more than 158 million¹ man hours lost to the British economy just in chasing bill settlement.

Mike Hutchinson, head of marketing at Bacs, said: “Late payment remains a big problem for British SMEs with £billions overdue against bills, causing small businesses to use up millions of man hours in chasing invoice payment. Cash flow is an essential business priority, particularly in a period of economic uncertainty, and we urge SMEs to consider turning to automated payments wherever they can to manage the money which is under their control.”

For more information about late payments and how to tackle them, visit www.paymedirect.co.uk where Bacs has developed a series of hints and tips for encouraging prompt payment.

By talking to Eazipay you can start the whole process of gaining control of your income.

Direct debit cancellations fall, but charities miss opportunities

This article is kindly borrowed from www.civilsociety.co.uk

Direct debit cancellations fall, but charities miss opportunities

The level of direct debit donation cancellations is falling, approaching pre-recession levels, but charities are often dismissing otherwise loyal donors after just one failed payment. 

After spending the entirety of 2009 suffering direct debit cancellation rates of above 4 per cent, charities saw a slow down in cancellations last year; cancellation rates never peaked above 4 per cent, ended the year at 2.87 per cent and had a year average of 3.3 per cent – the lowest since before the recession, in 2007.

The Charity Direct Debit Tracking Report, released today by Rapidata with Bacs, found that while the trend with cancellations was positive, charities were missing out by counting missed payments as cancellations. Just a third of missed payments were the result of an actual cancellation by a donor; the report found that the majority of missed payments were the result of insufficient funds. Of those who failed a payment due to lack of cash in the account, the report found that 62.5 per cent paid the pledged donation when re-presented for payment by the charity. 

Combined, the 117 charities studied as part of the survey saw a 7.8 per cent rise in total volume of regular direct debits and 9.8 per cent rise in total value, which reached £28.5m. 

Donors are also giving more on average each month. The average monthly gift rose by just under £1 to £12.86 in 2010, with the area of children, young people and family enjoying the highest average gift, at £15.01. 

Online direct debits have seen a good year, with the report finding a 36 per cent increase in the number of donors signing up to a regular gift online. The average such gift, however, is lower at £8.09. Gift aid take up on these online gifts is high.

Scott Gray, managing director of Rapidita, said the issue of how charities treat non-payments is critical. “For the first time we have undeniable proof that re-presenting failed direct debits prevents unnecessary loss of income, and charities need to be made aware of the issue,” he said.

“Even if you’re a small charity and you’re losing just one donation of £10 a month, month after month it adds up.”