The delinquency of companies shoots up 15.8% year-on-year

SMEs are the ones that suffer the most serious consequences of unpaid bills. Generally, because they have fewer financial resources to deal with the lack of recorded income. And, therefore, they show more vulnerability. The question then is, first of all, to carry out an exhaustive control of collections and payments. And, in any case, find a way to offset the negative impact on cash flow in order to continue to meet the recurring obligations of the organization.

Defaults occur after expiration of the period agreed between supplier and customer. Because there is some customer disagreement regarding the products/services purchased. Or due to sudden economic difficulties that prevent the payment from being made. All companies to a greater or lesser extent have been affected by the non-payment of some invoices.

According to the latest data published by the Cepyme Default Observatory, the delinquency of companies shoots up to 15.8% year-on-year. Which means that the commercial debt with late payment amounts to 264,567 million euros.

Opening the reserve box can increase the risk of financial collapse. While, increasing billing implies time.

Warning, scroll to continue reading

SMEs have Different alternatives ranging from tapping into the company’s financial reserves to increasing billing and profit margins. Now, opening the reserve box can increase the risk of financial collapse. Whereas, increasing billing takes time. And, unfortunately, as the Spanish ERP company for SMEs, Datisa, points out, financial problems do not wait.

Pablo Couso, commercial director of Datisa says that “The best solution is to prevent potential overdrafts that the organization could face. That is, use an efficient billing system with which to keep the collection and payment processes up to date. A system that makes it possible to identify possible points of friction. And that helps make decisions on the fly, based on the different scenarios that may arise”.

An unpaid invoice is an economic loss for the organization. Far from being a secondary problem, pending collection or unpaid debts represent a clear threat to the survival of a business. Hence the importance of integrating a collection and payment management system to guarantee the prevention of this risk of non-payment in day-to-day operations.

Collection and payment management system

It is important to integrate a collection and payment management system to guarantee the prevention of the risk of non-payment in day-to-day operations.

Establishing a protocol in the financial management system will also help identify potential problems before they become real problems. Here are some of the steps that should be included in a financial management protocol:

  1. Have clear, truthful and up-to-date information about clients: legal situation, financial health, etc.
  2. Request an economic deposit, as an advance payment, for each order over a specific amount.
  3. Send systematic reminders or automatic alerts, when the due date is approaching.

In any case, establishing a suitable workflow and automating certain tasks will help optimize the time spent managing unpaid invoices. Pablo Couso recalls that «time is money and that, if you lose time in these functions, you lose money that can hardly be recovered».

Related Articles

Leave a Reply

Your email address will not be published.