How late payments can impact retailers

How quickly does your business pay creditors? And how often are incoming payments overdue? Cash flow is crucial to any business’ effective operation, and a culture of late payments can cause irreparable damage, writes UK Business Finance’

Karl Hodson …

One of the first tell-tale signs that a business may be on the road to becoming insolvent is poor company cash flow. If a business is consistently cash poor, this means that it is probably cash-starved, and therefore can’t tend to company liabilities such as staff wages, rent, utility bills and stock replenishment costs.

The latest high-profile casualty for the furniture industry was the administration of Made.com, as it ran out of cash – this shows that the time is ripe for even the most in-demand retailers to work harder to protect their financial position and secure a fighting chance to stay afloat amid the energy crisis.

Late payments – how rife is the practice?

The Time is Money: The Case for Late Payment Reform from the Federation of Small Business (FSB) includes up-to-date findings on late payments that highlight the current state of play between businesses in relation to payment timeliness and tardiness. The findings include:

• 52% of businesses experienced late payments

• 25% of businesses reported increased late payments

• 37% of businesses applied for credit to manage their cashflow

To cope with the damaging impact of late payments, over one-third of businesses turned to alternative avenues to maintain company cash flow. Without sufficient cash flow, a business can rapidly collapse under the weight of growing overheads and persistent pressure from creditors to make payments.

While over half of businesses reported late payments, a quarter reported increased late payments, which shows that the practice is widespread, with little in the way to deter big businesses from engaging in this manner.

In the retail space, the practice of late payments is a hot topic, with industry leaders being called out for unfair payment practices.

The IPSE Payment Practices Index ranks the payment practices of some of the largest companies in the UK, including furniture retailers Furniture Village, Dreams and Oak Furnitureland. Here’s how they ranked, including average time to pay, percentage of invoices paid within 30 days, and percentages of invoices not paid within the agreed terms.

The following furniture retailers took between 50 to 67 days on average to pay invoices: Furniture Village (67 days); Dreams (67 days); Oak Furnitureland (33 days); DFS (29 days); and Habitat (50 days).

The percentage of invoices paid after 60 days are as follows: Furniture Village (54%); Dreams (57%); Oak Furniture Land (2%); DFS (4%); and Habitat (30%), and the percentage of invoices not paid within agreed terms include Furniture Village (11%), Dreams (12%), Oak Furniture Land (26%), DFS (52%) and Habitat (22%).

While only two of the five furniture retailers hit an average around the 30-day mark, what happens when the tables are turned, including the long-term effects of late payments on retailers – particularly when the business is cash poor?

Why late payments can make or break a business

Late payments can fuel a cycle of disruption for businesses as, if a string of invoices are paid late, this could trigger payment delays to a wide range of creditors, including suppliers, HMRC, landlords, staff and customers. Once this domino effect is in full swing, it has the power to cut off the ability of the business to fuel investments, such as upgrades to business operations, recruitment drives and stock diversification.

If the pool of company cash is stagnant, this can hinder progress and cut away at the ambition of the business, which can be damaging to its financial future.

www.ukbusiness.finance

DO YOU ENJOY ASSISTING CUSTOMERS? PERHAPS YOU HAVE A BACKGROUND IN FURNITURE SALES ROLES?

If so, our key account development manager role could be perfect for you!

Limelight Beds have enjoyed another successful year, and are now looking to recruit to expand our client management team.

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Excellent customer service skills, an ability to build rapport and willingness to learn and grow with the company are key.

The role is based at our premises in Barwell, Leicestershire, but will also involve visiting clients at their premises across the county, therefore a driving licence and own vehicle are vital for this role.

This is an ideal opportunity for someone to prove their worth.

Our team enjoy: training and development opportunities; attendance at business trade events; and the autonomy to drive forward their respective area.

To apply, in the rst instance, please send a covering email and CV to Aiyub I Sidat, director, at aiyub@limelightbeds.co.uk

Senior Buyer Furniture & Home Accessories

Location:

Ayrshire, Scotland (hybrid role with 2 day per week office-based)

Salary:

£40k + £10k annual bonus

Job Outline:

As a Senior Buyer, you will be responsible for sourcing, selecting and negotiating with suppliers to ensure the best possible products are available for our customers.

You will also work closely with our merchandising and marketing teams to ensure the right products are available at the right time and at the right price.

Full job description available at FurnitureNews.net

To apply, please submit your CV and cover letter to jobs@thedesignerrooms.com highlighting your relevant experience and qualifications.

AREA SALES MANAGER – SOUTH OF ENGLAND

We have an opportunity for a talented Area Sales Manager to join Kaydian working within the South of England area. Key requirements are previous sales experience and a proven track record with success in winning new customers.

THE ROLE

• Reporting to the Sales Director you will join a well-established company within the wholesale bed market.

• As Area Sales Manager you will be developing relationships with a wide range of customers and looking for areas of growth within our existing customer base and developing new business within the designated geographical area.

• Your role will largely be field based either working remotely from home or building relationships with new and existing customers.

REQUIREMENTS

• Previous sales experience in selling would be advantageous.

• Experience working within a sales / target driven role.

• Experience in attending Trade Shows and presenting new products.

• Able to regularly stay away from home at least one night per week.

• Must hold UK Drivers Licence for more than 12 months.

BENEFITS Salary +

-OTE £45,000.00 per annum

The International Alliance of Furnishing Publications (IAFP) comprises 17 of the world’s leading industry trade publications.

As the IAFP’s UK representative, Furniture News can offer exporters and importers market information, contacts and reach through the most effective B2B channels.

Stuart Priestley at stu@kaydian.co.uk www.iafp.info