This informal CPD article was provided by that credit control, a professional outsourced credit control service helping UK business owners with customer late payments and overdue invoices. This article provides a quick view into Days Beyond Terms (DBT) and some recent late payment statistics in the UK.
Business Cash flow and Days Beyond Terms (DBT)
Cash flow is the term used to describe the money that comes into and goes out of a business on a regular basis, monthly for example. Ultimately a business’s success is based on its ability to generate positive cash flow. It is important for all organisations to manage their customer invoices professionally and ensure any overdue invoices are paid as soon as possible in order to help forecast monthly business cash flow, and minimise bad debt. In the current climate many businesses are struggling to get customers to pay on time, which has a knock on effect to general business growth and operations.
What are Days Beyond Terms (DBT)?
Days Beyond Terms (DBT) is the phrase used to describe how long a customer takes to pay their overdue invoice after the due date of the invoice terms. According to The Chartered Institute of Credit Management magazine (CICM) in their March 2021 magazine, it appears that businesses across every region of the UK are suffering from payment delays during this current time.
The CICM article explains that in January 2021 there are only 5 industry sectors in the UK that have seen improvements to customer late payments DBT and it is not surprising that the Hospitality sector is currently suffering severe late payments delays. The current average Days Beyond Terms for the Hospitality sector was 35.7 days, which is an increase of 15.2 days when compared to December 2020.
In addition, the industry sector called ‘Business from Home’ is also seeing severe delays in customer invoice payment, averaging 34.8 DBT for the same period. The current statistics show that late payments are occurring in all industries in the UK across all regions.
Importance of managing customer late payments
Dedicating time to manage customer late payments can be a burden, time-consuming and sometimes complex depending on the situation. Many business owners are experts in their field, but not necessarily experts in asking customers to make payment for overdue invoices. Credit control plays an important factor in collecting as many customer payments before an invoice gets close to days beyond terms.
Credit control helps businesses keep regular contact with customers to ensure any outstanding invoices are paid to terms where possible. The longer an invoice is left unpaid and increasing in DBT, the risk of bad debt increases. Eventually the invoice may either need to be written off or possibly passed to a debt collections company if payment cannot be secured.
We hope this overview article on Days Before Terms and customer late payments was helpful. For more information about that credit control please visit their CPD Member Directory page. Alternatively please visit the CPD Industry Hubs to find relevant courses and events suitable for your Continuing Professional Development requirements.
