Late Payment Epidemic Continues For Small Businesses
Despite government efforts, late payment terms remain an issue for small firms with more than one-in-ten waiting 90 days to get paid
Small businesses continue to struggle with late payment problems, with research by Tungsten Network revealing that 12% of companies wait 90 days.
Furthermore, many companies say their cashflow is stretched beyond its limit and they are missing out on new business as they cannot afford to take on any new clients until they get paid.
The news comes despite a surge in government efforts to lessen the payment delay for small and medium businesses, which included the introduction of an advisory board, a new commissioner to deal with small business complaints, and strengthening the Prompt Payment Code.
More recently, small business minister Anna Soubry announced plans to appoint a commissioner under the Enterprise Bill. The government’s overall intention is to get businesses to pay their suppliers within 60 days and move towards a 30-day standard.
Philip King, the co-chair of the Prompt Payment Code Advisory Board and chief executive of the Chartered Institute of Credit Management (CICM), commented:
“The Code has helped to elevate the late payment debate to the top of the Boardroom agenda, supporting all sizes of business that struggle with the challenge of getting paid on time and to agreed terms.
“What is vital, however, is that the Code is given greater visibility, publicity and support to encourage more people to engage when things go wrong, and to highlight the examples of good practice that are already prevalent. The mechanism exists but it needs to be used more.”
Are late payments causing your business problems? Check out our guide to avoiding them here.