Research carried out by the Institute of Directors (IoD) has revealed that almost half of small and medium enterprises have struggled with late payments in the last year.
Around one in three (30%) payments to small businesses are now late and the average value of each payment is £6,142 – a huge amount to smaller organisations who are reliant on cash coming into the business on time.
Of the 787 business leaders who were surveyed, 48% said they have faced issues with late payments since April 2017. Almost a third (31%) said this was the result of an ‘excessively bureaucratic payments system’ within the company being invoiced.
Others noted a disparity between the practices of smaller and larger businesses, with 23% claiming larger firms in their supply chain used ‘grossly unfair’ terms or practices.
In December 2017, small business commissioner, Paul Uppal launched a complaints handling service which was intended to help companies resolve payment disputes. Only 1% of respondents to the IoD survey thought mediation by the small business commissioner would be the best way to address late payments however.
Edwin Morgan, director of policy at the IoD, said:
“It is deeply disturbing that so many businesses have to struggle to claim the money they are owed. Chasing late payments can have a particularly damaging effect on small companies, sapping resources and hurting their productivity.”
“The government has a job to do to publicise the options that are out there, and we would also urge them to consider stronger measures to clamp down on the menace of late payment.”
If you’re one of the many small and medium enterprises affected by late payments, please don’t hesitate to get in touch with PKB Accountants and we will be able to advise you on how to improve your cashflow.