Currently, three out of five small suppliers are paid late by large corporate buyers. As a result, SMEs are forced to take out expensive, short-term credit from banks to cover their cash flow difficulties, which drives their business costs and pushes up the price of their products. In the UK alone, 50,000 SMEs go bankrupt because of late payments each year.
“SMEs are the backbone of the world economy, generating most of the growth, employment and innovation. Yet, most of them are consistently paid late by corporate buyers. It is an unsustainable position which damages the entire economy”.
With so much business uncertainty around the world and so many trading restrictions that have been put in place to protect the global population during the Coronavirus pandemic there has never been a better time to consider an Escrow.
Digital Escrow is designed to minimise risk of loss especially when it comes to a customer becoming insolvent and not paying their invoices. With so many businesses effectively being shut-down due to the Covid-19 we spoke to Jonathan McFarlane, Director of our sister company, Pongo Pay., a specialist in Construction Escrow.
“There is clearly a payment crisis for small and medium size business. Accessible, frictionless and efficient electronic escrows such as YataPay Secure are fast becoming the new standard for B2B transactions and are a solution to the late payment problem. Businesses are now venturing into the unknown as far as credit risk is concerned and protecting cash flow should be one of your most important considerations right now and in the foreseeable future. Construction has always been a hazardous sector, but the risks seem higher than ever now”
“An Escrow protects against customer insolvency and default. With escrow, there is no longer a reason why your customer can’t pay you. i.e. the funds are securely held, protecting you against someone else’s insolvency. If they have received the goods or service, the money is automatically released. Good credit risk management is all about protecting your cash flow and not over-extending credit to weak companies but even the best companies fail. If the unforeseen happens and payment is threatened, due to insolvency or default, you know you’re protected with an escrow.
If you think you would benefit from using an escrow please get in touch with our Escrow team on 07739948244.