UK firms need to address late payment issuesData Insights 13 March 2014
For small businesses in the UK, there can be few more irksome issues than late payments, which mess things up in all sorts of ways.
Yet despite this being the case, an incredibly high number of firms are willing to write off the money, even though it amounts to a whopping £32.5 billion across the country each year.
In fact, as much as £2.4 billion is being written off a month, which is remarkable and goes to show the extent of the problem.
A recent survey of 1,000 tradespeople revealed that 75 per cent have been victims of a late payment in the last 12 months.
More specifically, it found that individual consumers (60 per cent) accounted for the bulk of these, while a mere 17 per cent think that large firms are the worst offenders.
But if you’re a small business owner, then perhaps the most worrying finding is that 45 per cent of victims have had cash flow issues as a consequence.
What’s more, some 54 per cent suggested that accepting that dealing with late payments is part and parcel of being a small business.
“The evidence is clear that customers are often unable to make cash payments on the spot, meaning bills are left forgotten or unpaid,” commented Colin Willman, Chairman of the Federation of Small Businesses (FSB).
He continued, “As a result, small businesses are being hit hard by late payments and they should not stand for this any longer. They are entitled to charge interest and complain. However, introducing automated payments is one way they can take action now and help themselves to maintain a healthy cash flow, and grow their business.”
It’s truly alarming that although late payments are a common problem, companies are so reluctant to act on the issue.
It’s really important, though, that firms address the problem before it starts to cost them money.