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No excuse for late payment
Late payers are using increasingly novel excuses to avoid paying invoices on time, according to Lloyds TSB Commercial Finance in Birmingham.
However, it warns that while the excuses may be humorous, the company on the receiving end may not see the funny side as it struggles to solve its cashflow problems caused by the late payment.
Mike Boswell, area sales manager at Lloyds TSB Commercial, said the escalating problem is causing major headaches for businesses in the region, especially SME's.
"From conducting talks with our customers, a growing number of them said they had fallen foul to this problem on more than one occasion," he said.
"Although it may not seem like a serious problem, the effects of late payments can cause underlying cashflow problems for many businesses, especially the smaller ones that don't have the sufficient funds to cover the cost of the invoice. "
Amongst some of the quirkier excuses offered by late payers were: "I've just been diagnosed with agoraphobia and can't go out the office to post the cheque"; "I've broken my arm and can't sign the cheque"; "The boss has died and the cheque book was in the suit they buried him in"; and "My pet has died and I had to choose between paying for it to be buried or paying you. "
Although extreme, the above examples demonstrate the lengths some companies will go to in order to avoid paying invoices.
Commercial Finance's asset based lending facility, which includes factoring and invoice discounting, is one solution to avoiding the late payment blues.
With invoice discounting, the client company manages its own sales ledger and credit control, but under a factoring arrangement, these are managed by an agent such as Commercial Finance.
Up to 90 per cent of the invoice value can be advanced to the company within 24 hours of it being raised. The remaining balance is then made available when the customer settles the outstanding invoice.
Mike Boswell added: "Bizarre excuses can bring a smile to the face, but strip away the humour and you are left with a stark fact.
"Although highlighted in a humorous context, late payment is a serious issue that can severely damage a company or stunt its growth prospects.
"One way companies can help themselves to overcome this problem is to actively manage their ledger by taking control and proactively talking to those sitting on invoices. This way they can resolve any issues sooner rather than later and hopefully deflect potential late payment excuses. "
Lloyds TSB Commercial Finance is part of the Lloyds TSB Group plc.
