Late payment remains a concern for many small businesses according to the latest research from the national small business group, the Forum of Private Business.
In the organisation’s latest banking and finance survey, published on 22 April, 23 per cent of members reported an increase in late payment over the past year compared with only three per cent who reported a decrease.
A total of 29 per cent had seen an increase in the average number of days beyond the deadline that a payment was made late. In contrast, only eight per cent reported a decrease.
The forum said that while an improving economic situation meant the number of businesses seeing late payment as a serious problem had remained static, small businesses were still keen to see more measures to tackle the issue.
A total of 39 per cent of businesses surveyed would like to see prompt payment better promoted, 37 per cent would prefer to pay VAT on money once it entered their account rather than when an invoice was submitted and 36 per cent wanted to see persistent late payers barred from government contracts.
Forum chief executive Phil Orford said: “Improving cash flow is the likely cause for late payment issues remaining static, despite lengthening payment terms.
“However, upwards of £30 billion remains tied up in late payments, costing a typical small business 130 hours a year to chase and meaning that a third are forced to seek external finance to cover the gaps in cash.
“Government is mulling over responses to a recent late payment discussion paper, which revealed ample ideas for tackling the issue in a more robust manner including the reintroduction of compulsory reporting of company payment terms and practices, and annual checks for Prompt Payment Code signatories.
“It is essential that government uses the recommendations to introduce effective measures and accepts that it not only has a responsibility to play in this area but also that its increased action can also act as an important catalyst for better payment practices.”
At Milsted Langdon, we understand that late payments can have a significant impact on your business’s cash flow. Our debt recovery specialists can assist credit controllers to collect difficult or long-outstanding debts, without the need to resort to legal action. For further information, please contact us.