Two thirds of firms that offered a payment holiday to trade debtors have said there will be a negative impact on revenues and profits, according to a new survey from the Chartered Institute of Credit Management (CICM).
The survey shows that of the 83% of firms that offered a payment holiday, 66% anticipate a negative impact. Of those, a quarter said the losses could amount to 40% or more and 16% are not expecting any payments until the end of 2020.
Sue Chapple, chief executive of the CICM, said: “’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 that did not offer a payment holiday, some extended payment terms while others are working on a ‘pay as you go’ basis.
Chapple added: “Payment holidays benefit some to the financial detriment of others, and there has to be a day of reckoning.”
The survey shows that 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.