A new business survey has confirmed the persistence of late payment, where three in five SMEs have been left billions in debt.

Once again, late payment has demonstrated its hold over British business. Since the collapse of the construction giant Carillion earlier this year, the country’s late payment culture has been thrust into the spotlight. The government has attempted initiatives to change bad payment behaviour but so far very little has changed.

This recent poll by Hitachi Capital, the Japanese lender, found that smaller businesses were more likely to suffer from late payment, with 63 per cent of businesses with an annual turnover of less than £1 million affected. The research reported a mere 30 percent had seen all of their invoices paid on time.

.Late payment has always hit small businesses the hardest. Persistently unpaid invoices weaken cash flow, leaving insufficient turnover that has consequently driven small firms into financial hardship. Insolvencies and restructuring procedures have become commonplace on the high street, where online competition and stunted spending behaviour have further contributed to the growing vulnerability of SMEs.

Without third-party assistance, these small businesses- the lifebloods of the UK economy- are at risk of ceasing to exist at all.

 

Late payments were found to be most prevalent in the manufacturing and legal sectors, where 81 per cent and 79 per cent of respondents respectively reported such issues. In the transport and distribution sector, 76 per cent of companies cited unpaid invoices.

Government initiatives such as the Prompt Payment Code have provided limited relief and the responsibility now rests with the businesses themselves. Most firms lack the expertise to operate efficient credit control procedures so third-party services are therefore recommended. Nevermind their size, businesses need to be advised on how to retain positive creditworthiness. Thorough credit checks are obviously vital here and this is where the Credit Protection Association come into their own.

The monitoring services offered by CPA scrutinise payment practices of all customers and suppliers. The consequent credit checks, status reports and directorship databases all offer information on creditworthiness, highlighting any bad behaviour or CCjs that may suggest an antagonistic future business relationship.

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The Latest Insolvencies to 17 Aug 2018

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