Bacs encourages SMEs to give cash flow a break this summer!

In a bid to help small-to-medium enterprises (SME’s) keep on top of work and ensure staff and bosses unwind and enjoy their time in the sun, Bacs is offering SMEs in the UK, the chance to win the services of a personal assistant (PA) for 5 working days.

For UK-based SME’s the summer months can be a difficult time. With key members of staff away on holiday, administrative and financial tasks relating to cash flow management can easily slip to the bottom of in trays.

Commenting Michael Chambers, Managing Director of Bacs, said: “Understanding and controlling cash flow is a major issue for all businesses – large and small.* A minor blip in financial administration over the summer months could have disastrous long term consequences. Whether it’s lacking a senior cheque signatory or someone junior to open the post and bank supplier cheques, the financial performance of SME operations can easily be compromised during the holiday high season. The potential results can be catastrophic with businesses experiencing reduced profit margins and working capital plus higher levels of borrowing.”

According to Bacs, 4% of SME’s experiencing late payment issues have been told by suppliers that the reason for delayed arrival of funds was because of a holiday. 3% of SME’s, who have themselves made a late payment, also held their hands up and admitted to using their own holiday as an excuse for delaying payments to clients or suppliers.**

Continuing Michael Chambers said: “Whether you are in the office or away on business or pleasure, the only sensible choice for reliable, punctual payments is automation. By encouraging SME’s to automate payments and giving them the chance to win the assistance of a PA for a week, we hope to help make late payment excuses relating to holidays a thing of the past.”

Bacs research indicates that 90% of office workers think automated systems – like Direct Debit and Bacs Direct Credit – help run their lives more effectively. Using automated payments like Direct Debit and Bacs Direct Credit means businesses know exactly when funds will be debited from or credited to their accounts.

In comparison, cheque payments can be time consuming with collation, signing, reconciliation and banking processes to manage. The creation of Direct Debit and Bacs Direct Credit files is simple, inexpensive and can reduce administration times and costs leaving staff free to concentrate on more pressing projects.

To help SME’s further, Bacs has come up with a pre-holiday check list containing essential tips every SME should consider when planning summer vacations:

1. Check if company utility bills are due for payment - avoid late payment surcharges while you are away by setting up Direct Debit payments
2. Also apply best practice at home and set up Direct Debits accordingly for any household or credit card bills
3. Time is precious in the pre-holiday period - reduce time spent at the bank by seeing if you can bank online
4. Don’t get caught out by late payment legislation. Use Bacs Direct Credit to pay your suppliers on time, help maintain good client relationships and avoid interest on late payments
5. Similarly, if your holiday falls around pay day, ensure that salaries and wages will be paid automatically using Bacs Direct Credit. There’s really no excuse for not paying staff while you sun yourself by the pool!
6. To keep the cash flowing in while you are away, don’t rely on others to pay in cheques. Contact key customers and ask them to pay by Bacs Direct Credit – the funds will clear straight into your account.

To be in with a chance of winning a Bacs PA for five working days, SME’s should visit http://www.paymedirect.co.uk/ and register their details. Additionally, SME’s can sign up for free holiday ‘text tips’ to be sent direct to an individual’s mobile phone in the five days leading up to their break.***

For more information about Bacs and our services visit Bacs key facts

Contact Bacs press office.

Notes
*Bacs findings are backed by statistics from the Department of Trade & Industry’s (DTI) annual small business survey (published at the end of March 2006). The DTI report revealed cash flow is a problem for 18 per cent of all small UK businesses with 56% of respondents blaming late payments from business customers.

** Data was taken from the Bacs Late Payment Survey 2004. This was a robust survey and fieldwork was conducted by a leading independent research agency in accordance with the market research code of conduct.

*** Competition guidelines: Registration for text alerts closes 31 July 2006, and holiday must begin between date of registration and 30 September 2006. The competition prize is the use of a personal assistant for the winning entry for five working days. In order to be eligible for this prize draw you must register your details for the SMS pre-holiday updates by 31 July 2006. This prize draw is only open to UK residents over the age of 18.

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