Late payment continues to be an issue for many small and medium sized businesses, according to recent research by the Forum of Private Business.
The research found that 23% of the Forum’s members had experienced an increase in late payment over the last 12 months. Only 3% said late payment had reduced.
The research also found that many businesses believe more measures should be taken to reduce this problem:
- 39% of respondents said there should better promotion of prompt payment,
- 37% said VAT should be payable when money has entered their account rather than when an invoice is submitted, and
- 36% called for frequent late payers to be barred from Government contracts.
“Improving cash flow is the likely cause for late payment issues remaining static, despite lengthening payment terms,” commented Phil Orford MBE, Chief Executive of the Forum of Private Business. “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.”
“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 that its increased action can also act as an important catalyst for better payment practices,” he added.
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