Late payment causing insolvencies in St Helens

editorial image
0
Have your say

At least one in five St Helens business insolvencies in the past year were caused by late payment, it has been claimed.

Research by insolvency and restructuring trade body R3 reveals that late payment for goods or services was a major cause in 23 per cent of collapses - up three per cent on 2014.

Separate research by R3 has also shown 29 per cent of firms in the North were owed payment on an invoice that was at least 30 days overdue.

The latest figures also show that the insolvency of a customer or supplier was a factor in 20 per cent of insolvency cases – the so-called “domino effect.”

R3 North West chairman Richard Wolff said: “On the surface, late payment or the failure of another company can seem like factors outside a company’s control, but there are plenty of steps you can take to reduce the risks. Businesses must not be complacent when it comes to checking who they are trading with.

“If a business is not paid upfront it is essentially acting as a lender – albeit without the protections a secured lender enjoys.

“Keeping track of invoices and getting paid is vital. To safeguard against the risk of customers’ insolvencies, one option is to make sure terms and conditions include an effective ‘retention of title’ clause – checked by a lawyer – to allow the retrieval of goods from an insolvent customer if they have not been paid for.”