More than half of small firms 'are victims of late payment'
05 Feb 2014
Recent research has suggested that more than five out of ten small businesses fell victim to the late payment culture in 2013.
The study, conducted by the Federation of Small Businesses (FSB) revealed that 51% of its members were paid later than the original agreed payment date, by large private sector companies.
Of these firms, 34% reported reduced profitability, with 32% paying their own suppliers late and 29% reporting an impact on business growth.
The business group is urging the Government to strengthen the Prompt Payment Code, making it mandatory for large businesses to set out their payment terms and to agree to pay promptly.
Commenting on the report, John Allan, National Chairman of the FSB, said, 'As the economy gets stronger we must do everything we can help businesses and late payment is an issue the Government and large businesses must tackle. Small businesses simply can't be expected to lend interest free to their large customers, which is in effect what extended payment terms and late payments results in'.
According to the FSB, many small businesses are reluctant to begin charging interest and to complain about late payments, through fear of losing valuable contracts.
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