Canadian SMEs Are Concerned About Late Payments, Bad Debt and Rising Interest Rates

  • Nearly half of Canadian SMEs (48%) say that collecting payments from customers on time tends to be the most problematic aspect of managing their cashflow.
  • 31 percent say they’ve suffered bad debt over the past year with an average write-off of $49,000 CAD.
  • Over half (52%) believe the availability of finance in Canada is excellent or good, yet 55 percent cite high interest rates as the greatest difficulty to accessing external finance. 

TORONTO, October 26, 2017

Canadian SMEs admit they’ve suffered from bad debt over the past year, while many struggle to collect payments from customers on time stalling cashflow, according to the latest Global Business Monitor report, an annual survey of SMEs undertaken by cross-border financing provider, Bibby Financial Services (BFS).

The study surveyed SME owners and decision makers from 11 countries including  the U.S., Canada, the Czech Republic, France, Germany, Hong Kong, the Republic of Ireland, the Netherlands, Poland, Singapore and the UK.

Almost half (48%) of Canadian SMEs acknowledge that collecting payments from customers on time is the most problematic aspect of managing their cashflow. On average, customer payment times averaged 38 days for Canadian SMEs, while U.S. SMEs receive payment in an average of just 23 days. Of these Canadian SMEs, 42 percent are paid within 30 days compared to 50 percent paid over 30 days. To address this challenge, BFS recently published a guide, Get Paid On Time: How to Protect Your Business Against Late Payments, on how SMEs can find alternative ways to protect themselves from the impacts of unpaid invoices and increase their cashflow.

Additionally, in the past year, 31 percent of Canadian SME’s have suffered from bad debt resulting in money owed that could not be recovered and an average write-off of $49,000 CAD.

Calum Williamson, President / Managing Director - Canada, Bibby Financial Services said: “Canadian SMEs continue to struggle with collecting payments from customers on time, which ties up cashflow and restricts business growth. Many business are not aware of funding solutions like factoring which can help SMEs by releasing working capital from outstanding invoices and injecting it back into the business quickly, efficiently and cost effectively. Factoring converts invoices to cashflow within 24 hours freeing up management time so business owners can focus on strategic growth.

While over half (52%) believe the availability of finance in Canada is excellent or good, many are put off by the challenges to access funds, citing high interest rates (55%) as the greatest difficutly to accessing external finance. As the Bank of Canada increases its benchmark interest rate this year for the first time in seven years, more than 40 percent of survey respondents expressed concerns that higher interest rates could hinder their business growth either through the impact of customers or the cost of funding needed.

Williamson added: “It has never been a question of if interest rates will rise, it's a question of when for SMEs. Rising interest rates come hand-in-hand with the several other challenges Canadian SMEs are facing such as rising minimium wages and changing tax regulations. As SMEs continue to face these matters, its important they are working with a provider who understands their business, customers and challenges and can tailor solutions to their unique needs.”

About Bibby Financial Services

Bibby Financial Services is a leading independent financial services partner to more than 10,250 businesses worldwide providing more than $1.25 billion in funding annually and handling $11.6 billion in annual client turnover globally. With over 44 operations in 13 countries spanning Europe, North America and Asia, we provide asset-based lending and factoring solutions to help businesses grow in domestic and international markets. Established in 2001, Bibby Financial Services North America has seven offices in the U.S. and Canada that support businesses in virtually any industry. We hold memberships in the Commercial Finance Association, the International Factoring Association, and the American Finance Association.  Bibby Financial Services is part of Bibby Line Group (BLG), a diverse and forward-looking family business with over 200 years’ experience of providing personal, responsive and flexible customer solutions. To find out more about Bibby USA and Bibby Canada, please visit www.bibbyusa.com or www.bibbycanada.ca.

Posted by on 26 October 2017.