20th March 2015

SMEs Call for Stricter Payment Terms to Better Manage Cash Flow Npower Business Survey Reveals Cash Flow Frustrations

Almost one quarter (23 per cent) of small and medium-sized businesses (SMEs) think that a Government led implementation of stricter payment terms would have a significantly positive impact on their business over the coming 12 months, according to an npower Business survey of SMEs in the UK.

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SMEs Call for Stricter Payment Terms to Better Manage Cash Flow Npower Business Survey Reveals Cash Flow Frustrations

The research highlighted that late payments have a substantial negative impact on a business’ ability to manage its cash flow and despite 57 per cent of organisations putting in place strict payment terms when it comes to working with clients, many still feel not enough pressure is being placed on customers to pay on time.

However, the survey revealed that while some methods for managing cash flow are in widespread use, such as adopting fixed-rate energy contracts, others are being ignored: notably the ability to stop estimated bills by installing smart meters and Automated Meter Reading (AMR) meters.

Notably, 69 per cent of SMEs recognise that fixed rate energy contracts can help them to better manage their finances and 64 per cent already subscribe to one. However, whilst 27 per cent of SMEs recognise that having an AMR would also help with cash flow, only 6 per cent of respondents have a smart meter installed falling to 3 per cent for AMR meters.

“With late payments a blocker to managing cash flow there are a number of initiatives an organisation can take to keep a hold on their finances,” says Phil Scholes, SME Markets Director at npower Business. “Fixing an energy plan for one, two or three years is a great example of how a business can make financial forecasting much simpler, but we also know that installing AMRs or smarter meters can also provide even more financial peace of mind. This is why we’re switching to smarter metering by installing AMR meters in businesses across the country.”

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