Small companies remain concerned by levels of late payments
Small businesses in the UK remain concerned with late payments and financial issues, despite the economy showing signs of major recovery, according to new research.
Late payments have been causing issues for SMEs for some time and are still doing so, according to the Forum of Private Business.
Some 23% of respondents to its latest banking and finance survey reported an increase in late payments during the past year, while only 3% reported a decrease.
Furthermore, 29% of companies revealed the average number of days beyond deadline for a payment to be made also increased, while 8% said the time period had shortened.
Some 19% of companies revealed that both aspects of late payments had seen an increase in the last year, placing financial strain on their businesses.
The number of businesses seeing this as a serious problem has neither increased nor decreased as a result of the improving economic situation, but SMEs are still keen for more action to be taken, according to the survey.
Possible solutions
Some 39% of companies want to see better promotional tools for prompt payments, while37% would rather pay VAT on money that enters their account rather than when an invoice is submitted.
In addition, 36% would like to see persistent offenders unable to gain access to government contacts, believing this could serve as a viable solution to tackling the issue.
Any negative financial aspects surrounding the way that a company operates can build up over time and can eventually require business rescue if not managed at a prior point in time.
Businesses want to avoid such measures where possible, but sometimes they are unavoidable if the finances are not in place to rectify issues.
Some £30 billion is currently tied up in late payments, according to the survey which costs in the region of 130 business hours every year to chase up.
As a result, around a third of companies affected were forced to seek external finance or other measures to plug the financial gaps.
By Phil Smith