Thursday, May 14, 2009

More on late payments

I've posted a few times recently about late or non payment of invoices and the effect that has not only on the company waiting for payment but on the overall economy.

I've been talking, of course, about the government-linked major companies here, who are reportedly late in paying billions to their suppliers and contractors.

A report just published on a similar situation in the UK and Europe gives a good indication of the damage to business and the economy that it causes.

The research is by Intrum Justitia, a European credit management company, who introduce it by saying:

European governments could provide a €65bn stimulus to their home economies by simply paying invoices owed to suppliers in full and on time.

Punctual payment in Europa could save money equal to a €270bn cash injection for EU businesses.

European businesses spend a minimum of €25billion chasing late payments from consumers and businesses each year.

The research shows that UK public authorities are among the worst culprits in Europe for not paying invoices in full and on time. They owe about £6bn (over Dh33 billion) in unpaid invoices with much of it due to SMEs which are struggling hard to survive in the current economic climate.

This gentleman hits the nail squarely on the head:

"On the one hand we have governments across Europe pumping huge sums of money into their economies to increase cashflow, yet on the other hand, these same entities are not paying invoices on time," commented Lars Wollung, CEO, Intrum Justitia. "If public authorities would pay on time it would help the cash flow of businesses in Europe, enabling them to invest faster and pay faster themselves."

It's not rocket science is it. If they simply followed good honest business practice the benefits throughout the economy are there for all to see.

You can find it here.


Photos Dubai said...

I think YOU have hit the nail on its head.

The 10 billion bond shoudl enable the govt related entities to open the bottleneck once they start disbursing the money. Nakheel has recently disclosed that they have recieved a part of that fund.

You are right... once this cash start moving thru the system, it will have a multiplier effect across other smaller businesses

Grumpy Goat said...

I once knew someone who worked for the British Civil Service. She bought missiles for the Royal Navy, since you ask.

According to her, the Ministry of Defence operated a policy of querying invoices, delaying approvals and generally procrastinating for as long as possible before making any form of payment.

At the same time, the then Prime Minister, John Major, went on record to deny such a policy. Meanwhile, firms went bankrupt waiting for Her Majesty's Government to honour its contractual obligations.

a question of a question said...

"She bought missiles for the Royal Navy, since you ask."

why was Royal Navy buying missiles? Which country in their right mind would think of attacking Her Majesty's Country?