A quater of companies offer a prompt payment discount
A survey by the Better Payment Practice Group (BPPG) has found that a quarter of UK companies offer a prompt payment discount to their customers. The trend is higher among smaller companies than larger firms, with nearly two fifths of respondents with between 10 and 49 employees admitting that they offer a discount.

The poll, which was held on this web site, asked businesses if they offer a discount to customers for prompt payment and split the respondents by number of employees. Of the 476 respondents, a quarter offered a discount to prompt payers. Smaller companies, with between 10 and 49 employees were most likely to offer a discount, with 39% stating they do, while large companies, with over 250 staff, were least likely, with only 21% offering a discount.

Professor Robin Jarvis, Head of Small Business at the Association of Chartered Certified Accountants and member of the BPPG, said, “Offering a discount for prompt payment can be a useful way of getting your invoices paid more quickly. However, it is only viable for goods and services that have a high net margin and, before offering an incentive, businesses should calculate the full cost of the discount to ensure that it is not more expensive than agreeing longer credit terms.”

He continues, “When offering a prompt payment discount, it is also important to have the resource to control unauthorised deductions. Some customers may apply the reduction to payments made too late to qualify and without strict credit management controls in place it can be difficult to recover this money.”

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