The Consequences of Late Payments for Your Business
Late payments are putting the survival of many UK companies at risk. In fact, 1 in 3 business leaders agree that late payments pose the most significant threat to their organisation. When a company relies on timely payments, they can’t afford to ignore the importance of a reliable collections process.
In this article, we’ll explore the consequences of late payments on businesses and the knock-on effect they can have. We’ll also explore the collections process in more detail.
The Impact of Late Payments on Cash Flow
Did you know that poor cash flow is the primary cause of failure for a shocking 82% of businesses? Unfortunately, the number of companies affected by stunted cash flows may rise. The ongoing pandemic and cost of living increases will likely cause more households countrywide to struggle financially, and therefore be unable to pay their bills on time.
Consequently, companies will need to plan for the ‘year of the squeeze‘ by ensuring that they have strategies in place to help people who can’t pay their bills and hold those who can pay accountable. To learn more about how to make the collections process more straightforward, check out our latest guide.
In the meantime, let’s look at the knock-on effect that late payments can have on an organisation:
1. Recruitment Challenges
Just under half (49%) of all EU businesses say that slow or late payments prevent them from hiring new employees, which only adds to the current recruitment crisis. Since the pandemic forced most companies towards remote working, people have begun to rethink their priorities and expect a greater balance between work and home life.
No longer constrained to working at a local office, skilled advisors can now work for any company across the UK, meaning that competition for top talent is fierce and loyalty is at an all-time low. If organisations don’t have the financial means to outbid their competitors for the most experienced collections experts, they’ll have a hard time keeping up.
However, the problem is a vicious circle. Without a big enough budget, companies can’t attract the best professionals in the market. But, if they don’t have skilled collections advisors on their teams, they may struggle with more late payments. That’s why more business leaders are reaching out to collections experts that can handle the entire process.
2. Stunted Business Growth
When companies have to wait for money owed to come through, they may have to put other projects on hold or take out loans. In extreme cases, they might even need to make redundancies. And as we mentioned above, businesses need skilled employees to keep the collections process running.
Worryingly, over 90% of organisations across Europe, the Middle East, and Africa don’t have a transparent view of their cash flow, meaning that they could be caught out unexpectedly in the coming year. Subsequently, business leaders must ensure that they have a plan in place to encourage more customers to make timely payments and support those that are struggling.
3. Reputational Damage
Since poor cash flow hinders a business’ ability to hire and retain staff, or expand and offer new services, the customer experience may begin to suffer. With more people requiring customer services and companies finding it challenging to hire staff, they might notice that wait times are creeping up. The main problem with long wait times is that most callers hang up after just one minute 55 seconds of hold time, and 34% of those people won’t bother calling back.
In today’s world, companies that maintain the best reputations are the ones that adapt to the customer and work with them to reach solutions. But, organisations will only have the means to create excellent experiences if they keep their cash flow in check.
Avoiding Late Payments is Crucial for Your Business
Unfortunately, some late payments are an inevitability. Whether those late payments impact a business significantly or not ultimately comes down to how the collections process is handled. Those that have an expert team of trained, experienced advisors are setting themselves up for success, so it’s worth any business leader ensuring that they’re investing enough into that area of their company.
Nevertheless, an estimated 8.6 million Britons are battling debts, causing customer support and collections call volumes to rise by the day. As such, it is becoming a struggle for many to dedicate the time to finding the best talent and training them to the highest standard. The good news is that collections experts, such as Sigma Connected, exist to alleviate the common challenges businesses face and help their customers in the process.
Remember, although cash flow should be a business priority since it maintains the operations, companies must also take a careful approach to how their teams handle their customers’ unique experiences. Currently, people across the country are having to make tough decisions every day — sometimes between eating or heating — so empathy will be vital to maintaining a reputation as a service provider of choice.
Read more on how to handle sensitive situations appropriately and create a healthy cash flow as a result here.
Make Poor Cash Flow a Thing of the Past with Sigma Connected
At Sigma Connected, we’re invested in helping you and your customers simultaneously.
We understand that every company’s needs are different and will vary over time as your business and customers’ needs change. As a result, we adapt quickly and work flexibly to meet your needs.
Want to learn more about our services? Contact us today