Growth, revenue and hiring hit by late payment

23 December 2011

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24 December 2011 | Angeline Albert

Late payments are stunting growth, damaging revenue and preventing hiring at some US businesses, according to some senior executives.

The Capgemini Executive Insight Survey found that of the 304 senior executives from Fortune 1,000 companies who responded to an online poll, more than a quarter (27 per cent) said late payments affect their ability to hire staff.

Capgemini's survey, conducted in September by Harris Interactive, also found late payment is putting pressure on US companies’ bottom line with 29 per cent saying it has damaged growth and 20 per cent claiming it hit revenue. The ability of companies to offer wage rises, support innovation and invest in research and development is also affected. 

The poll also revealed that 45 per cent had experienced an increase in late payments. Some 15 per cent said they experienced 25 per cent more late payments than in the previous year.   

To mitigate the risk of late payment, some companies were outsourcing cash collections. Of those who did this, 34 per cent claimed it had increased their company’s profitability.

Chris Stancombe, head of finance and accounting outsourcing at Capgemini, said: “The survey shows a worrying trend as many top firms are being impacted by an increase in late payments. In this market, the need to stimulate cash flow is critically important to companies looking to remain competitive and sustain a strong workforce.”

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