Felt the pinch last month? You weren’t the only one, according to recent research. A study by Hitachi Capital Invoice Finance suggesting that February poses the most cash flow problems for Britain’s freelancers, contractors and SMEs.
According to their findings, the last week in of February in particular gives businesses the most grief, with swathes of clients holding off paying their invoices until the month is out.
Eager for an additional month’s credit, the culture amongst clients appears to be to hold off payment until after the first week of March. This practice is having dire cashflow repercussions for freelancers and small businesses already struggling against the traditional tribulations of the month…snow, slow sales, all that normal winter tripe.
According to Hitachi, the by-product of all this payment procrastination is a ‘crushing domino effect’ that’s crippling SMEs financially – and looking at the figures their assertions are hard to dispute. Estimates suggest that the UK’s small businesses are owed more than £36bn in late payments collectively.
Looking at findings like these, Michael Fallon’s resurrection of the prompt payment code looks to have gone largely unheralded, the threat of bad PR appearing a negligible tool in getting bigger businesses to pay up sooner rather than later. Maybe it’s time he upped his legislative arsenal.
Until Fallon fathoms a way crack down on these late payers, cast an eye over our guides on getting paid on time and chasing down those pesky payments. Hopefully then next February might prove a little less gloomy if only on the cash flow front.
Photo by Mrs Gemstone