Escrow help mitigate risk against unpaid or late invoices due to a company insolvency or other factors causing hold-ups with a company’s cash flow.
Government figures from 2019 show that the highest number of new company insolvencies came from the construction industry with 3,198 insolvencies. Wholesale and retail businesses, along with the vehicle repair industry, came next with 2,442 insolvencies. The accommodation and food services industry was third with 2,307 insolvencies. These figures show that no matter how clear your invoice terms are, if a company becomes insolvent before paying their bills, you could be in trouble.
Businesses are facing uncertain times so it’s more important than ever to make sure you have the right invoice terms. This will ensure you’re doing the best you can to get your invoices paid on time.
According to research by BACs, the late payment debt for UK SME’s (businesses with less than 250 employees) rose to an astonishing £23.4 billion in 2019. This research also shows that the bill for late payments is costing SMEs £4.4 billion a year, with 22 per cent of those spending £500 a month chasing payments.
Late payments are not only bad for your business cash flow but can also impact your wellbeing. A few late payments can cause many a sleepless night and create uncertainty for the future. But how can you make sure your bills get paid? Read more about Escrow Accounts.