According to a new research - commissioned by American International Group (AIG) and PrimeRevenue and conducted by YouGov - 17 % of UK businesses revenue is currently tied up in invoices with non-standard payment terms, suggesting that around GBP 29 bn is being withheld from UK plc (public limited company). Over three quarters (77 %) of companies have been asked to accept longer payment terms, with 28 % saying the issue has increased in the past year.
What’s more, businesses reported that on average 20 % of their customers insist on terms longer than the norm. This can have a significant impact on business operations with respondents saying extended payments affect cash flow (55 %), require additional administration (33 %) and strain client relationships (29 %).
Moreover, the risk of not providing extended payment terms can be costly. One in five respondents (20 %) report that they have lost business after denying customers longer payment terms.
With these business risks in mind, AIG and Prime Revenue have recently launched a new supply chain finance offering for mid-market, non-investment grade companies that could free up significant funding for UK businesses.
Total sample size of the survey was 250 adults with responsibility for invoicing and payment terms within businesses which provide goods or services to large organisations (i.e., organisations with revenues of approximately GBP 100 million or more).
American International Group (AIG) is a global insurance organisation serving customers in more than 100 countries and jurisdictions.
Headquartered in Atlanta, US, with offices around the world, PrimeRevenue offers financing options through its OpenSCi product suite.
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