The Close Brothers Business Barometer research has highlighted the ongoing problems that manufacturers face in coping with late payment of invoices.
The results have shown that such firms are typically owed larger outstanding sums than companies in other industries, making it problematic to invest in growth. In the survey carried out in December 2017, 41.4% of manufacturing businesses said they were owed between £21,000 and £40,000 in late payments whereas 33.8% of firms across all industries were owed as much.
As such, manufacturers’ operations are being constrained. December’s Barometer, for example, showed that 75.9% of manufacturers said late payments made cash flow difficult to manage.
So why are manufacturers more prone to late payments? One possible reason is that they are likely to be doing business with larger customers which may feel more able to delay paying bills without worrying about upsetting their suppliers – an approach that smaller customers may be reluctant to take. Equally, the nature of manufacturing provides more scope for customers to raise quality issues, for example, which can lead to delays in invoices being settled.
The late payment of invoices is a perennial problem for businesses of all types. Whether it is dealing with late payments, coping with fluctuations in demand or looking for money to invest in new plant and machinery, access to funding is likely to be crucial for any manufacturer.