One of the most frustrating areas of running a business is dealing with late payments. No one wants to track a client down to pay. A study of worldwide payment behaviors by Euler Hermes found that the total number of late payments has actually increased. This is not good news for anybody, but it’s worse for some than others.
Hermes investigated which industries are the worse culprits at late payment behavior and found these six industries had it bad:
- Energy and Utility
- Food Service
- Freelance and Creative
The energy and utility industry, according to the study, was facing that worst track record for both total dollar amount owed and number of outstanding accounts.
Unfortunately for the construction industry, Hermes study showed that they have the most consistent problems with late-payments. Due to the fact that construction often has large price tags on their projects, they face bigger problems when paying. Around 31 percent of construction companies actually reported that they had “almost gone out of business due to outstanding payments”, compared to 19 percent of manufacturers and five percent of retailers.
Despite these troubling figures, there is hope for these industries. The study predicted that retail, energy and automotive industries would soon take a turn for the better in making on-time payments.
These industries simply aren’t plagued with people who choose to pay late, however. Late payments are often following a domino effect. One client’s late payment causes the business to be late on their payments and so on. You can help to stop this cycle by tightening up on your own late payment invoices. By sending reminders regularly and keeping track of each clients due date with accounts receivable software, you can reduce the days sales outstanding for your clients.