Big Companies Worst Late Payment Offenders
Large firms are the worst offenders when it comes to paying small and medium-sized suppliers on time, research from payment organisation Bacs has found.
In Bacs’ survey of 471 small businesses in November 2010, a third reported that they were owed money by big companies — with the average debt running at £27,000.
The poll indicated that the difficult economic climate had exacerbated the problem. More than half (53%) of small firms said they had experienced late payment — up from 45% in June 2010.
Government and not-for-profit organisations, however, have speeded up their processes, the findings also suggested. The number of small and medium-sized businesses experiencing late payment from the public sector nearly halved from 11% to just 6% in the last six months of 2010.
Forum of Private Business spokesman, Phil McCabe, said Bacs’ findings reflected the experience of many small firms.
“Larger companies will often cite complicated internal processes as the reason for late payment, but this can be just an excuse. “The issue is that many big firms are using smaller businesses as a source of free credit.”
“The problem is that few small firms want to rock the boat by complaining, in case they get blacklisted, and in reality, not many want to charge interest on overdue payment for the same reason, so the issue remains entrenched.”
Delayed payment caused major difficulties for small businesses, leading to disrupted cashflow and owners forced to spend time chasing outstanding invoices.
Firms typically had to wait an average of 39 days beyond agreed payment terms to get paid, the report said, while many spent at least half a day a week pursuing payment.