Here at Commercial Domestic Investigations we’re always keeping up to date with late payment news. We understand how much of a problem late payment can be, and how badly it affects your cash flow.
This week a new report from specialist outsourcer Echo Managed Services found a new cause of late payment. The report found that nearly half (41 per cent) of debts and late payments owed to businesses are as a result of customers simply forgetting to pay them, rather than the more expected reasons such as not having the means to pay.
More financial stability = increased late payment
Echo Managed Services also found that late payments were, in fact, most common amongst more affluent customers. Within those in higher income brackets, it was found that forgetting to pay was the biggest contributor when it came to late payment. Almost half of people that have missed a payment were found to be in the £40,000+ salary bracket, stating it was for this reason. This is compared to 28 per cent in the under £10,000 salary bracket and 37 per cent in the £10,000 to £19,999 bracket.
After forgetting and then not being able to afford it, the most common reasons for late payments were:
- An incorrect amount or misunderstanding the bill – 26%
- Redundancy or loss of job – 12%
- Loss of earnings due to ill health or incapacity – 7%
- Withheld payment for poor service – 6%
Monica Mackintosh, Customer Services Director at Echo Managed Services, said: “Our report reveals that the socio-economic spread of debt is much more varied than many might think – clearly everyone has the potential to fall into arrears, regardless of income and demographic. As a result, it’s crucial that businesses trying to recover monies owed take a much more tailored and proactive approach to collections and use detailed customer profiling so the most appropriate solution can be aligned with each individual customer.
“Early intervention and proactive multi-channel customer communication can be extremely effective in helping to mitigate avoidable debt – such as forgetfulness, withholding payment in protest, or non-payment as a result of inaccurate billing. For those customers with genuine affordability issues, offering a range of achievable payment options and signposting to impartial debt advice is crucial.”
If you’re an SME owner who is suffering from late payment, get in touch for an informal chat about how you can keep your cash flow healthy with effective debt collection.
About Commercial Domestic Investigations
Commercial Domestic Investigations are regarded within the debt collection and credit control industry as one of the best credit management companies in the UK. Established in 1988 to support and service all sizes of companies in the field of Credit Management.
Commercial Domestic Investigations have recently featured in the press in The Guardian. To keep up to date with the latest debt collection news make sure to follow Commercial Domestic Investigations on twitter, LinkedIn and Google+.
We now boast a national client base in excess of 30,000 companies. Commercial Domestic Investigations has grown by listening to clients’ requirements and adapting our services to meet all companies’ needs from Sole Traders, SMES, Ltd and Plus. Please contact us on 08444 159200 for more information.