Late payments problem highlighted by FSB

Date: 3rd September 2009

Many small businesses are suffering from delayed payments from other firms as a consequence of the credit crunch, a report released this morning has shown.

The Federation of Small Businesses (FSB) cited multiple examples of larger firms, including courier companies and builders, having extended their mandatory payment times over the last 12 months.

This reflects the balance sheet squeeze faced by businesses of all sizes in the financial crisis and economic downturn.

FSB data suggest that one in three of its members are currently "waiting longer to be paid" than they were before the recession.

Responding to the problem, the group said that it had written to several larger companies in order to point out the cash flow problems that result from these delays.

It also signalled support for the government's Prompt Payment Code, which all firms can sign up to.

John Wright, national chairman at the FSB, added: "Poor payment practices in both the public and private sector can drastically affect cash-flow for small firms at a time when business owners are doing their best to hold on to precious funds."

He added: "The FSB would like to see as many private and public sector organisations as possible signed up to the Prompt Payment Code to ensure we can put an end to this plague and change the culture of late payments for good."