This article will not just discuss some of the impacts and consequences of late payments. You can also learn how to respond to these late or slow payment systems. How exactly do late payments affect your business? Let us consider a few ones that you should prepare for and learn to overcome.

Impacts and Consequences of late Payments for your Business
1. Has Implications on time and resources
Apart from the scheduled payments, a business will spend more time and resources to ensure that payments are made. That is a loss in administrative burden, especially for small and medium-scale enterprises.

2. Reduction in Working Capital
A business may experience insufficient cash inflow, affecting working capital, investment, and growth plans. Moreover, the available cash is probably only sufficient for running the day-to-day affairs of the business. A good business manager must do everything possible to limit such a situation. One way to do that is to ensure that the cash inflow does not stop due to non-payment or delayed payment.

3. Stunted Business Growth and Expansion
A business thrives on the inflow of payment, and when there is a delay, it also affects the growth of the business. One unique way this effect can occur is the inability to increase the salary of workers and members of staff. Sometimes, the company experiencing delayed payment restricts the team from earning their salaries and bonuses. As a result, people experience low motivation, morale and reduced productivity. If an employee leaves, it may lead to retention issues or extra business recruitment costs.

4. It Affects your credit score
It matters a great deal what your company weighs in terms of the credit score. This score shows the creditworthiness of your business considering the inflow and outflow of cash in the industry. If you allow a lot of creditors to hold on to your funds, then lenders may consider you a poor manager of funds, implying a low credit score.

5. Loss of customer or staff
When there are delays in payment for the products and services your business offer, it may affect work relationships. For instance, your relationship with the customer may be affected, and you may be forced to sever ties. On the other hand, you may be forced to have a pay cut on workers’ salaries because of outstanding payments.


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