No Improvement of Late Payment Problems for Small Firms
FPB research reveals the measures SMEs would like to see tackle delayed payment
Small businesses still face serious problems as a result of the ‘culture of late payment’, despite positive news on the UK economy, according to new research.
The Forum of Private Business (FPB) has found that 23% of its members have seen an increase in late payment over the past year, compared to just 3% who have seen a decrease. Nearly 30% have also seen an increase in the average number of days beyond the deadline that a payment is made late whilst 8% reported a decrease, and 19% have seen an increase in both elements of late payment.
The organisation’s latest banking and finance survey also found that small businesses want to see more measures to tackle the issue. 39% of businesses surveyed would like to see prompt payment better promoted, 37% would prefer to pay VAT on money that has entered their account rather than when an invoice is submitted and 36% wanted to see persistent late payers barred from government contacts.
Phil Orford MBE, 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.”