Small businesses are experiencing cashflow difficulties as a result of late payments, research from the Forum of Private Businesses (FPB) has shown.
The study revealed that almost nine in ten of respondents are not being paid within contractually agreed time periods. This is vastly affecting the firms themselves, with 72% saying that this is having a ‘serious’ or ‘very serious’ impact on their business.
The amounts owed vary widely but a third of companies are owed between £1,001 and £5,000, which in times of economic uncertainty is wreaking havoc with cashflow.
The problem is looking unlikely to subside with 56% saying that late payment has increased in frequency over the past 12 months. The FPB’s administration director Nick Palin said the authorities should be ready to confront the problem.
“The government should be doing more, both by paying on time itself and by implementing measures to tackle the problem without increasing the burden of legislation faced by small firms.”
Palin said “worrying” trends had emerged from the research. “Supplier abuse appears to be widespread, and many smaller firms are in a catch-22 situation, fearing that, if they take action and use the legislation to charge interest, these larger companies will simply refuse to deal with them again,” he added.
© Crimson Business Ltd.
