Although the UK economy is showing improvements, a late payment culture remains a problem for SMEs. The latest banking and finance survey conducted by the Forum of Private Businesses shows that businesses are keen to see more measures to tackle the issue.
Key data
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23% reported an increase in late payments over the past year, while just 3% saw a decrease. |
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29% have seen an increase in the average number of days beyond the deadline that a payment is made late. |
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39% would like to see prompt payment better promoted. |
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37% would prefer to pay VAT on money that has entered their account rather than when an invoice is submitted. |
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36% want persistent late payers barred from government contacts. |
Additional facts
- Around £30 billion is tied up in late payments and costs a typical SME 130 hours a year to chase.
- A third of small businesses are forced to seek external finance to cover gaps in cash because of late payments.
- A recent late payment discussion paper had several ideas for tackling the problem including compulsory reporting of company payment terms and practices, and annual checks for Prompt Payment Code signatories.
- Responses to the paper are currently being reviewed by the UK Government.
The number of businesses seeing late payment as a serious problem has remained static, according to the research – mainly because of the improving economy. However, issues remain the Forum of Private Business believes that the government should introduce effective measures and accept that it has a responsibility to play in the area. You can find out more about the problem of late payments here.
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