Lengthening DSO in UK.

Coface UK urged British businesses to improve their credit management procedures in the face of lengthening credit periods, following a web poll by the Better Payment Practice Group which found that three-quarters of UK companies believe DSO is increasing. Businesses in the UK and elsewhere can cope with this trend by managing the additional risk involved through improved credit management procedures such as credit vetting new clients before taking them on, and tightening up collections processes. Access to additional funding is also important to maintain cash flow while waiting for payment. Receivables finance lends itself well to companies who wish to offer longer credit periods because it releases the cash tied up in their unpaid invoices, so they do not have to wait until the end of the payment term to receive their money. Most customers see trade credit as a cost-effective form of finance and a useful tool for managing their own cash flow; whereas most suppliers have the perception that trading on credit is risky and should be minimized where possible. There are valid reasons for this view as late payment and bad debt can be devastating for a business; however, with the help of improved credit management and additional financing, businesses could offer and accept longer credit periods as a competitive advantage.

Source: Coface UK