Insolvency expert offers Lancashire firms this advice over late payment culture

Lancashire businesses are being put under additional strain by the UK’s late payment culture, new figures show

By Tim Gavell
Tuesday, 7th June 2022, 4:55 am

Research by the insolvency and restructuring body R3 showed that in April, North West firms had almost 757,500 unpaid invoices on their books that had gone past the payment deadline.

The research, which is based on information provided by Creditsafe, also shows that in the same month, over 59,100 businesses in the region had overdue bills – a key sign of business distress.

Now R3’s North West chair Allan Cadman is urging businesses to take steps to protect themselves from the impact.

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Allan Cadman

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He said: “Late payment is a perennial problem, especially for smaller firms, however at a time when many businesses are struggling to deal with rising inflation and economic turbulence, the impact it has on cashflow could be enough to tip some of them over the edge.

“If a business is not paid upfront it is essentially acting as a lender – albeit without the protections a secured lender enjoys. Previous research by R3 has found that late payment was a factor in 23 per cent of insolvencies, and the insolvency of a customer or supplier was a factor in 20 per cent of cases – the so-called ‘domino effect’.

“While late payment or the failure of another company can seem like factors outside your control, there are steps you can take to reduce the risks.

"Businesses should always check who they are trading with, keep track of invoices and put strict credit control procedures in place.

"To safeguard against customers’ insolvencies, make sure your terms and conditions include a ‘retention of title’ clause to allow the retrieval of goods from an insolvent customer if they have not been paid for.”

Allan, who is also a partner at insolvency firm Poppleton and Appleby, also urged firms unable to pay their bills on time to seek qualified advice as soon as possible.