Simply because the service buyers are not getting paid on time 🙁
Capegemini concluded the same in its latest research report in which more than 300 senior executives from Fortune 1,000 companies participated.
The objectives of the survey were :
- Has this increase in late payments from your clients had a significant impact on your business?
- Have late payments from your clients affected your ability to re-invest in your organization?
- What benefits have come from outsourcing your cash collections function?
The findings were
25 Percent of Fortune 1000 companies’ hiring capabilities are suffering due to delayed cash flow. The overall findings show that delayed cash flow stunts growth, prevents hiring and hurts revenue.
An important point to highlight will be only 50% of the participants observed the delay the rest had no issues at all.
The question remains in this age of globalization, where everything is interrelated, any weak link at any stage would disrupt the growth cycle and can create problems within the supply chain model of the industry.
However, not all is lost– those who are into recovery business , could see a rise in demand. After all collections never go out of business 😉
Last but not the least the survey said that delay in cash flow is affecting the ability to offer wage increases, support innovation and invest in research and development. That seemed a bit farfetched. In this economic downturn, Companies are more concerned about profitability and less about employee satisfaction or innovation.
The entire report can be download from here