In the organisation’s latest banking and finance survey, 23 per cent of members reported an increase in late payment over the past year compared with just three per cent who reported a decrease. Almost a third have also seen an increase in the average number of days beyond the deadline that a payment is made late whilst eight per cent reported a decrease, and 19 per cent have seen an increase in both elements of late payment.
While the improving economic situation means the number of businesses seeing late payment as a serious problem has remained static, small businesses are still keen to see more measures to tackle the issue. Nearly 40 per cent of businesses surveyed would like to see prompt payment better promoted; a similar number would prefer to pay VAT on money that has entered their account rather than when an invoice is submitted and 36 per cent wanted to see persistent late payers barred from government contacts.
Phil Orford, Chief Executive of the Forum of Private Business, 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.”
The Government has been criticised after it appeared that it had backed down on its promise to take action on late payments between large and small businesses. (See: Government climb-down on late payments action Shout99, Apr 2014)
Late payments were also recently blamed for a fifth of all insolvencies, particuarly int he construction sector. (See
Late payment causes a fifth of insolvencies Shout99, Apr 2014).
If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'.
Susie Hughes © Shout99 2012