Growing numbers of bosses fear that late-paying clients could wreck their business

Late paying clients can cause misery for business owners. Library picture featuring a model.  Picture PA wireLate paying clients can cause misery for business owners. Library picture featuring a model.  Picture PA wire
Late paying clients can cause misery for business owners. Library picture featuring a model. Picture PA wire
MANY MANUFACTURING and service sector firms are worried that late paying clients could wreck their business, according to a major study of business sentiment in Yorkshire.

Almost two thirds of bosses at firms who responded to the latest Sheffield City Region Quarterly Economic Review (QER) said they believed late payments could threaten their company’s viability.

Although the QER paints a largely positive picture of the region’s economy, the study also found growing concerns about cash flow.

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Over the last quarter firms in both services and manufacturing sectors on balance reported a weaker cash flow position compared with the previous quarter.

Dr David Littlewood, the lecturer in strategic management at Sheffield University Management School, said: “This quarter’s hot topic focuses on cash flow and supply chains.

“Cash flow balances for both services and manufacturing firms across the city region, while positive, are down compared to the previous quarter and their position compared to this time last year.

“A majority of service and manufacturing sector firms identify late payment as an important issue that could threaten their viability.”

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The report’s findings were discussed at a breakfast event which was held at the Copthorne Hotel in Sheffield, which attracted an expert panel and representatives from the four Sheffield city region chambers.

One of the panellists, Malcolm Pope of Shorts Chartered Accountants, said firms should be prepared for any potential cash flow problems. Speaking after the debate, he said companies should monitor how well they were collecting debts and how much debt was overdue.

He said companies should also look to secure the right type of growth. Mr Pope cautioned against taking on work with very low margins, because it leaves a company with less room for manoeuvre if something goes wrong.

“It’s all about planning and forward looking projections,’’ he said.

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Amy Cusworth from Oxley & Coward Solicitors, who was also on the panel, said although people were more concerned about cash flow, “you have a flipside of that, where they are looking to get bigger contracts”.

Speaking after the debate, she added: “They are looking at trying to secure that big contract and suddenly the cash flow goes by the wayside.

“It’s only when they find themselves in a very difficult situation where money is not coming in, and then they will suddenly go back to those terms and conditions, and go, ‘Oh yes, I forgot to look, what are their payment terms?

“Unfortunately, they don’t sit with our payment terms.”

She added: “People are trying to undercut each other at the moment for any work that’s been tendered that’s UK based.

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“They are trying to get that in place first, hoping they can start building those relationships, just in case when Brexit happens, they will suddenly find it more difficult to trade outside of the country.”

In his report to accompany the QER, Mr Littlewood said: “Business confidence for the year ahead remains robust; continuing the trend from the last quarter.

“Expectations of price increases, although still high, have also declined somewhat from the previous quarter. While these results are encouraging, businesses in the Sheffield city region still face challenges. Domestic focused service and manufacturing firms identify growing competition as a particular threat, In contrast, exporters identify Brexit and ongoing political uncertainties as the most significant concern they face. Exporters also report turbulent conditions in key international markets.”

The Sheffield City Region Quarterly Economic Review brings together results completed by regional businesses.

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The results are used to influence local, regional and national policymakers. The findings also help to shape the support structures available to the regional business community. The debate to discuss the report’s findings was chaired by Greg Wright, The Yorkshire Post’s deputy business editor, and also featured contributions from Steve Galvin of AVK Syddal, Andy Price of &create Marketing and David Postlethwaite, a corporate business development director at HSBC.

The fieldwork for the next quarterly review starts on May 21.

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