Warning issued over late payments.
2nd January 2018.
Mike Cherry, chairman of the Federation of Small Businesses, has accused late payers of holding Britain’s small firms to ransom, suggesting this covers £18bn in payments, and has warned that the issue could adversely affect 5.7m small companies and self-employed workers.
In an end of year message Mr Cherry said: “Small businesses deserve to be paid promptly. They should not face supply chain bullying.” He also called on the Government to reform business rates.
The warning came as Research by UHY Hacker Young has found most businesses take more than 30 days to pay their suppliers, with the average term reaching as high as 113 days.
Only 29% of businesses were found in the research to settle their accounts within 30 days!
And only 52% of invoices were settled within that time frame.
UHY Hacker Young said the research showed that the Governments transparency push has yet to make any significant impact on the culture of late payment.
Multiple governments have tried different approaches to get big businesses to pay on time with little effect.
SME’s are owed £14 billion at any one time according to the governments own figures.
Some of the businesses had standard terms of paying as late as 120 days after the invoice, regardless of their suppliers terms.
For example the recycling arm of DS Smith, the paper and packaging company, took 113 days on average to pay suppliers. The bookstore Waterstones took 69 days. Law firm Clifford Chance Europe took 73 days. None of the major supermarkets has yet reported its figures. Enterntainment Magpie, an online trader in second hand books, music and movies was by contrast the fastest, averaging just 5 days, with 94% of invoices paid within 30 days.
Elsewhere, research from MarketInvoice shows that 60% of invoices issued by SMEs in the South West in 2017 were paid late – up from 45.2% in 2016. The average value of these invoices was more than £51,000.
Late payment leads to increased borrowing and can even end up with good businesses being pushed into insolvency by their bad payers!
The business department said that tackling late payment could potentially provide a £2.5billion boost to the economy.
The Credit Protection Association are passionate about tackling the late payment culture. Through our website www.payontime.co.uk we seek to highlight the disease on UK business and encourage business owners to break the cycle and tackle late payment.
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
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