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More companies dodge payment

New research published today by Creditsafe, the business intelligence experts, reveals UK businesses are routinely forcing trading partners to reissue invoices.

More than one in ten companies (14%) has been forced to reissue at least 20% of client invoices in the last 12 months. In the same period one in five companies (20%) has had to reissue between ten and 20% of invoices.

A staggering 96% of companies surveyed have been forced to reissue invoices to their customers in the last 12 months. Firms often hope that if a replacement invoice is issued that the timescale for payment will be restarted, enabling them to keep hold of money to protect their liquidity - despite this strategy potentially causing major problems for trading partners that are relying on these funds.

Outlandish excuses received by credit controllers to ensure an invoice is reissued include, “I’m too important to read my post, so why would I know you billed me” and the case of a Reading based software firm where the financial director was informed “I’m going through a divorce, please issue the invoice to my soon to be ex-wife!”

David Knowles, Business Development Director, Creditsafe said: “Unscrupulous accounts payable teams and finance directors are using every trick in the book to prevent paying invoices on time. Ensuring the reissue of invoices is, unfortunately, often an effective tactic to delay payments, but is extremely poor business practice and ultimately flouts a moral obligation to pay on time for goods or services that have been purchased and probably used.

"Crucially, the late payment of invoices prevents the efficient flow of monies through the supply chain, which is vital if businesses are to maintain their cash flow at a time when credit is still difficult to source."

Half (50%) of UK businesses that accept cheques for payment found customers making what they believe are deliberate mistakes, such as failing to sign the cheque or writing the incorrect amount or date. When contacted by the creditor, firms have often dreamt up outlandish excuses to explain the delay in payments. A small carpet fitting firm was informed payment would be delayed because “My husband has my cheque book and he has now been put in prison”. A credit controller for a firm of accountants was informed “Our accounts lady is off at the moment as her cat died”.

Additional bizarre excuses received by UK companies for the delay in payment of an invoice include:
• ”The finance director had a heart attack due to stress and can’t sign cheques in hospital.”
• “The customer couldn’t get into the office to get the cheque book because the locks had been superglued by travellers. The cheque was for £18,000.” • “The goods were signed for in a different colour pen to the one our warehouse manager normally uses, so we have to check it was definitely him who signed for the merchandise before we pay you.”
• “My wife has gone off to look after the grandchildren for a week and taken the business cheque book with her.”
• “The boss who authorised payment had gone to Thailand as his mother in law is ill, but I could hear him clearly in the background to the call.” David Knowles continued: “Stalling for time because of unusually coloured ink sounds quite ludicrous. Some of these excuses really aren’t far removed from ‘the dog ate my homework’ schoolboy line. Whatever the excuse, though, delays in payment can have a serious impact on firms reliant on cashflow.”

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