Late payments to small firms total £26bn

Date: 11th March 2009

Late payments to small businesses have soared 40 per cent to a total value of £26 billion, it has been found.

Research by Bacs Payment Scheme, the group responsible for direct debit, found that the average amount owed to a small business in 2008 was £38,000.

According to the investigation, the most common cause for late payments is cashflow problems - something which an accountant can provide invaluable advice on.

A spokesman for the Forum of Private Business, Phil McCabe, said: "Late payment and bad debt are the scourge of business owners. Often, they are major factors behind businesses being forced to close.

"The problem has intensified as a direct result of the credit crunch and economic downturn, as credit from suppliers has increasingly dried up."

Earlier this week, the British Retail Consortium called on the government to extend its temporary 2.5 point cut to the rate of VAT.