Press Release: Payment Holidays Prove Nightmare for Creditors
Press Release – 9 July 2020
66% said there would be a negative impact on revenues and profits.
16% not expecting any payments until the end of 2020.
Payment holidays – while supporting some businesses through the current crisis – may be the death knell for those that have offered them.
A survey of members of the Chartered Institute of Credit Management (CICM) suggests that of the 83% of firms who had offered a payment holiday, two thirds (66%) said there would be a negative impact on revenues and profits.
Of those, a quarter (25%) said the losses could amount to 40% or more, seriously impacting their own future performance and viability.
The majority also saw no immediate end to the current hiatus, with 82% expecting the payment holiday to last for at least another three months, and 16% of those not expecting any payments until the end of 2020.
Sue Chapple, Chief Executive of the CICM, believes the figures confirm what many have feared: “Payment holidays benefit some to the financial detriment of others, and there has to be a day of reckoning.
“‘Holiday’ is a complete misnomer; there is no respite. It is simply delaying what still has to be paid, and the impact on cashflow for those trying to protect their supply chain could prove disastrous.”
Of the 17% of firms who did not offer a payment holiday, some simply extended payment terms while others were working on a ‘pay as you go’ basis.
And not all businesses see COVID-19 as a crisis. One – a graphic design business – said that revenues and profits had actually increased, and efficiency had ‘sky-rocketed’ as a result of home working!
The survey captured the thoughts of 1,000 CICM members across multiple sectors, from construction companies and builders’ merchants to legal firms and recruitment consultants.
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About the CICM:
The Chartered Institute of Credit Management (CICM) is the largest recognised professional body in the world for the credit management community. Formed in 1939, the Institute was granted its Royal Charter in 2014. Representing all areas of the credit and collections lifecycle, it is the trusted leader and expert in its field providing its members with support, resources, advice, and career development as well as a networking and interactive community. In addition to its comprehensive suite of qualifications and learning opportunities, events and magazine ‘Credit Management’, the CICM administers the Prompt Payment Code for BEIS. Independently, and through collaboration with business organisations, it provides vital advice to businesses of all sizes on how best to manage cashflow and credit.