Late payments from retail clients? There is something you can do…
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We work with authorised partners of the British Business Bank for the Coronavirus Interruption Loan Scheme
We work with authorised partners of the British Business Bank for the Coronavirus Interruption Loan Scheme

Businesses that work with clients in the retail sector are regularly facing late payments and long waits for invoices which can create cash flow problems. New research from credit reference agency Experian found that Tesco are the worst retailer for paying on time, as on average they are 106 days late paying their suppliers.

Late payments a big problem.

Experian put together a list of the UK’s biggest names in the retail sector and analysed how long it took each one to pay their supplier invoices. While some retailers have been found to be relatively quick when it comes to paying their invoices, many often make late payments take an average of 45 days (a month and a half) or longer to pay up.

Fortnum & Mason, Lidl and House of Fraser were the quickest retailers to pay taking between five and 15 days over invoice terms to pay; while the Big Four supermarkets, Debenhams and Iceland all take between 70 (over two months) and 106 (three and a half months) to pay suppliers.

That sort of gap between supplying goods to receiving payments as a business, particularly a small one, can create a lot of problems with cash flow to pay bills and produce new products to supply to customers. Research suggests £6142 is the figure of the average overdue payment to a small business; however SME suppliers to large retailers could be waiting significantly longer for a lot more money.

late payments retail clients

Many small businesses feel that obtaining a contract with a large retailer can be a great opportunity for them, but it can cause monetary issues they have not faced before if and/or when late payments incur. This can be particularly damaging for small business suppliers at Christmas when the volume of goods sent out is worth a significant amount of money but payment could be some months away.

It can be difficult to speak to these big retailers about your concerns or to renegotiate contracts and as a result, this is when many small businesses start to feel the negative cash flow effects of waiting for invoice payments.

What options have you got?

However, there is help at hand and there are options out there for businesses regardless of size or sector. As a broker we work closely with a number of business finance providers and we can offer you the best deals on the market to create the financial solution to suit you. If late payments on invoices is a problem for you, we can help you to set up an invoice finance facility.

If you’d like to find out more about how the invoice finance products work and how it can benefit you, visit our dedicated invoice discounting page and our dedicated factoring page. Often the cost of factoring can be a cheaper alternative than the interset you would traditionally pay on a bank loan.

You don’t have to struggle through with late invoice payments that could seriously affect your company if they are not dealt with; invoice finance is definitely an option you can look into as an alternative financing solution which has been beneficial for a number of businesses to date, and it could help you too.