Late payments impact small businesses

Chasing late payments could be costing the small business community a total of £1.9 billion a year.

Of 300 business owners and managers, 35% say they are finding customers are taking longer to pay invoices than 12 months ago, new research conducted by Bibby Financial Services has found.

Some sectors are suffering more than others. 47% of manufacturing and construction companies say that customers are taking longer to pay, a further 36% of firms in business services said the same.

At least 20% of small businesses say they are chasing each invoice at least three times and an unbelievable 48,000 businesses have had to follow up invoices more than 11 times.

According to BACS, small businesses are currently owed a total of £30.4 billion.

Alistair Darling vowed that the Government will pay 80% of its invoices from small businesses within five days, which is a reduction from 10 days, during the Budget announcement last week.

Edward Rimmer, Bibby Financial Services' UK chief executive, commented:

"The UK business community has got to stem the tide. We cannot keep stalling payment and expect it to have no consequence. Across this nation, businesses are fighting for survival with sustaining a healthy cash flow one of the biggest challenges. We need to support one another and do everything possible not to succumb to the easy route of late payment as it can become a vicious circle”.