Payments, Payments, Payments – The Cost of being Late

payments

Previously, we discussed the outstanding rise in late payments, the increasing occurrence and the lengthy process to resolve the issue. It is now imperative to address the empirical implications that come with late payments, the figures that can put companies out of business and the detrimental facts that this frustrating fad holds. The importance of acknowledging and avoiding conducting business with companies that are frequent late payers is ever-growing. For example, “latest research, from the people behind Direct Debit and Bacs Direct Credit, shows that the cost of recovering overdue money is now at an average of £9,000 for each business [per annum].” – Bacs Payment Schemes (Bacs).

Paying for Problems
It is outstanding that businesses have to fork out from their own wallets in order to receive money that they rightfully own. Beyond the fact that it potentially takes months of chasing up payments to gain some sort of clarity, the fees for the entire process are constantly rising, the longer the process the greater the fee. In the UK alone, it is estimated that the total late payments bill in 2017 was £14 billion! The magnitude of this issue is much bigger than addressed, it does not stop at the UK and actually spirals into a global phenomenon. For example, the UAE has been experiencing major increases to the duration of late payments, which, subsequently, dramatically increased the cost of chasing up late payments. In 2015-2016, the UAE saw over 200 debtors fleeing the country in order to avoid paying debts. Due to the magnitude of globalisation, a domino effect takes place within the late payments culture. If company A is waiting for payment that is long overdue, it will affect their cash flow and, thus, force them into delaying payments. This chain reaction can put many companies out of business.

Cooperation for Success – With Cedar Rose
In our previous article ‘LATE PAYMENTS: LOOKING OUT FOR THE UNDERDOG ‘ there was a new initiative mentioned that would significantly reduce the late payment culture and Cedar Rose has finalised and perfected this under the name of ‘Trade Rate’.

Trade Rate (see here for more information) allows you to share your voice and have your say on late payments through a scoring system. This can warn other interested parties of late payers or as a company that pays on time from those who have actually had experience trading with them. All businesses who participate can then reap the rewards of cooperation and know when to trade on secure terms. All you have to do is search for the company on our website and give a star-rating depending on how your experience of doing business with them went. The ultimate aim for this initiative is to help SMEs who are often at a greater risk of late payments than larger enterprises.

Although, you may be faced with a dilemma, what if the company you are looking for doesn’t exist in our 11 million+ companies database? The answer is simple, you can order a credit report on them, not only will you be better informed as to their current financial standing, but you will have the opportunity to add your rating as soon as the report is received. Furthermore if you order before the end of December 2018, we’ll give you a year’s free monitoring so you will stay “in the know”.

Work with Cedar Rose and help stamp out late payments once and for all. Cooperation is the key for success.

Written By Jack Evangelides, Marketing Assistant

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*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***

Insolvency on the Rise – Spot the Warning Signs Before it’s too Late

Insolvency

The repercussions of insolvency are a danger for all businesses, no matter how big or how small. The UK, for example, is experiencing a rise in insolvent firms up 2% in 2017 and an estimate of an additional 4% in 2018. This unrelenting trend is not something that happens ‘out of the blue’. The majority of cases of insolvency show many warning signs, thus, it is possible to spot them and control the inevitable impact on your company. Insolvency is troubling due to its ripple effect on the whole supply chain, therefore, it is important to perform risk management. Factors such as securing robust business intelligence, monitoring and analysing the credit behaviour of companies are necessary steps to take to mitigate risks. So what are the warning signs?

  • Track Payment Behaviour
    A strong indicator of whether or not your customer may be on the verge of insolvency is their customer payment behaviour. You can assess and track their payment behaviour and conclude whether there are any questionable changes such as recent late payments, a trend in non-payments or even offering bills of exchange in lieu of payment. These indicators should bring up initial warning signs of potential insolvency, especially if the payment pattern is out of the norm.
  • A Change in Orders
    If you notice a change in the typical orders your customer usually places with you, then there may be a reason for it. Strategies such as overtrading with lower profit margins, smaller and more frequent orders and a permanent use of full credit lines may indicate that your customer cannot reach their usual demand. Although there may be many reasons for a change in orders, if it is combined with the other factors mentioned in this article then the likely outcome may well be insolvency.
  • A Lack of Information
    How well do you really know your customer? A healthy business relationship would have two-way transparency. A business should also have good visibility into a customer’s financial position in order to be assured of payment on time, especially where receivables balances are large. Acknowledging the financial history of your customer before going into business with them is pivotal for risk management.
  • Communication Issues
    Are you conducting business abroad? Communication issues can become a big factor and a sign of potential insolvency. If repetitive, you may find that your customer is avoiding you and if you’re dealing with business in a foreign country it may be extremely difficult to manage the situation. No matter the issue, you should be able to reach your customer and have fluid communication amongst the party lines.
  • Industry Performance
    It is important to have one eye focused on how the wider market is performing. The wider market may be the factor which is causing disruptions in your everyday business dealings, if there is a lack of ‘good news’ in the industry this alone may well be a warning sign of worse things to come. Your customer may also be subject to the effects of the market, it may be a wise idea to see how your customer’s competition is fairing. If they are shutting up shop, then your customer could be next.

These are the 5 foremost warning signs to look out for, although not limited to. In order to mitigate potential risk of insolvency it is important to stay on top of the aforementioned problems. It may be tricky, especially for smaller businesses with less labour force, to conduct and research into all of these factors. Therefore, reaching out for help could be a wise decision to ensure the future of your company.

Cedar Rose – Keeping an eye out for you
Cedar Rose is an established business intelligence company, which particularly deals with developing countries. Whether your company is dealing abroad or locally, Cedar Rose, with over 20 years of expertise, may have the right solution for you. Our award-winning business credit reports can analyse and assess your customers to mitigate risks and any highlight any potential indicators of insolvency. Furthermore, Cedar Rose has recently introduced a new initiative ‘Trade Rate’ which allows you to personally rate business transactions. Not only does this allow for a more robust payment service but it also provides new source methods to increase the information from business arrangements.

Trade Rate is one of many benefits of using Cedar Rose, with other factors such as our monitoring services that can provide up-to-date information of a company if any unexpected changes occur. These aforementioned initiatives are key requirements in detecting insolvency and may be the saviour for your company. Additionally, for a direct analysis of risk, Cedar Rose credit reports come with the CR score – a quantitative and qualitative risk score based on more than 20 factors. CR Score is a visual indicator of the risk of a potential or current client enabling you to make an informed decision for the future of your firm. Cedar Rose’s state of the art AI technology aims to help companies mitigate risks and secure their futures for the long haul.

For more up-to-date news check out our newsroom.

Written By Jack Evangelides, Marketing Assistant

Sourced ImagePixabay

*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***

Trade Rate: Join the Global Action for Prompt Payments 

How often have you been left frustrated by late payments? Wouldn’t it be great if you’d have known in advance and been financially prepared? Would you even trade with a prospect that you already know doesn’t adhere to agreed payment terms? 

Cedar Rose – who have been providing credit reports on MENA companies for 21 years – is introducing the Trade Rate scheme, so business owners and credit managers can anonymously share their collective voice.

In the business world, time is of the essence, but Cedar Rose believes that allowing companies to rate their customers’ payment performance is both fundamental and lacking within the credit sector. We are delighted to announce the release of our newest innovative service – Cedar Rose Trade Rate. With this introduction, we invite anyone who finds their customer listed on our website to rate their payment experience at any time. Through our new easy-to-use online rating tool at www.cedar-rose.com you can now create informed ratings in less than two minutes with the greater benefit of providing reliable data for others to access.

This initiative aims to provide a more efficient and robust credit reporting service. Cedar Rose will use this information to help others make the safest decision possible. Once verified and approved by our team of analysts, average ratings will be displayed anonymously in our company credit reports for anyone to purchase online. By joining forces, business people around the world can help each other to make better informed choices about whether or not to extend credit and on which terms.

Using a simple star scoring system you rate your customer from 1 to 5 stars depending on whether their invoices were paid on time:

 

 

 

 


You can decide whether or not to add more details and a comment in the Advanced Rating form, choosing to remain anonymous if preferred.

This new and innovative scheme provides an extra level of security when conducting business. Cedar Rose hopes to stamp out the late payment culture and, at the same time, increase the amount of information available in order for businesses to make robust and informed judgements.

Stay tuned in to our newsroom for follow up articles on the latest initiatives, brought to you by Cedar Rose.

Written by Christina Massaad, Managing Director

*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***