NHS late payments increase. Is Invoice Finance the answer?

Factoring FInance BlogAccording to recent press NHS hospital trusts have become the latest thorn in the side for small business owners in respect of late payment from large organisations.

Despite the backtrack from the Prompt Payment Code in the wake of the austerity measures and the sounding of the 30 day target for payment small business groups have noted a marked increase in the number complaints about some hospital trusts moving very much in the wrong direction of invoice settlement.

It was reported in the Financial Times that some hospitals have in fact cut the time they pay outstanding invoices to as little as 10 days in recent years, following central government’s lead.

One such example of the goal posts moving was reported to come from the Southend University Hospital in Essex, where it had previously paid invoices within 30 days but has now changed policy to pay 30 days from the end of the month ion which an invoice is received. This policy shift effectively doubles the waiting period from 30 to 60 days if supplying firms submit an invoice on the 1st of any month.

Despite the glaring change in payment times being doubled for some, Southend’s director of finance said that the hospital ‘had not changed its payment policy’. If it were so liberal with facts in respect of patient mortality rates, then central government would step in and reorganise the hospital, but that its supplying firms face mortality from late payments; the biggest killer of UK small business, seems to be of no interest.

A name and shame group, The Forum of Private Business, which has compiled a list of companies whom have significantly worsened their payment terms to suppliers, want the government to do more to tackle the issue and move forward, not backtrack on the Prompt Payment Code. Although the European parliament adopted a late payment directive in October setting a maximum cap of 30 days for the public sector to settle its bills and 60 days for business-to-business transactions, businesses remain sceptical about how the new law will be enforced.

Late payment problems will continue to be a problem for UK sme’s for many years to come as although on the faceoff it, government has to be seen to act, there is much work to do yet.

If you are concerned about late payments and cash flow, invoice finance can both unlock the potential in your sales ledger, and all but remove late payment problems altogether. With an invoice factoring or invoice discounting facility in place some 80-90% of your outstanding invoice value can be in your bank account within 48 hours of issuing, meaning you don’t have to wait 30 or 60 days for payment.

Invoice Finance has seen an explosion in popularity of late, as the banks are simply not issuing small business finance products such as overdrafts anymore, and unlike bank lending, the only security needed for invoice finance, is the invoice itself.

For an impartial discussion on how Factoring Finance can source the best facility for your needs from our UK wide independent broker network, get in touch and let us do the rest.

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