Late payments 'causing problems for SMEs'

Date: 22nd May 2009

Late payments are more of a pressing issue for a number of small UK-based businesses than profitability, it has been suggested.

Business support service Business Link has asserted that recessionary woes are being exemplified as a result of clients not paying SMEs on time.

John Grange, a Business Link adviser, pointed out that many companies are already struggling because their order numbers have shrunk during the economic downturn and late payments are only making matters worse.

Mr Grange's comments follow the release of the latest annual Late Payments report from Barclays Local Business, which indicated that businesses in England and Wales could be due over £2,400 each on any given day.

As such, the national total for late payments is almost £10 billion.

"When businesses see a contraction in demand for their products and services they may respond by downsizing or looking for new markets, but in this transition phase you are very vulnerable to a period where your overheads are the same but the cash coming into your business has declined," he said.

"Managing your cash is vital at the moment and late payments are an integral part of that."