Late Payment Remains “Headache” for a Third of Small Firms
Almost a fifth of small and mid-sized businesses say late payment problems have gotten worse, with 15% of companies stating the issues threaten survival
A third of small businesses say late payment issues continue to be a barrier to success, with a fifth stating that the problems are getting worse, according to the latest Close Brothers Business Barometer (CBBB).
The report, which is a quarterly survey by finance group Close Brothers Invoice Finance (CBIF), revealed that for companies who find late payment issues a major “headache”, 65% believe it results in cashflow problems and an additional 15% feel that it threatens their firm’s chances of survival.
More than half of the companies struggling with late payment problems also stated that it has resulted in their business having to reduce their average annual turnover by up to 10%, with nearly a quarter confirming that they had to write off between 10% and 25% of their turnover in the last 12 months.
The findings demonstrate the importance of the recent government and Federation of Small Businesses (FSB) efforts to end late payment by big and public sector companies, which included a cross party roundtable as well as changes to the Prompt Payment Code. Large corporations and public sector organisations remain the worst late payment offenders, with 43% of the survey’s respondents stating so.
CEO of CBIF, David Thompson, commented on the findings:
“The amount of money that small businesses are forced to write off as a result of late payments is staggering and surely hindering business growth.
“We have recently welcomed new rules from the cabinet office which aim to reduce late payments by the public sector by enforcing 30 day payment terms which should help to improve the situation somewhat.”