Late payments still blight a third of SMEs
14th November 2016 | News
Just over a third (34%) of UK small businesses are still affected by late payments, according to the latest quarterly Business Barometer from Close Brothers Invoice Finance.
Although the UK Government has worked to curb the nation’s late payment culture, almost one-in-five (17%) small business owners claim that late payments seriously impact their ability to trade, while almost two-thirds (60%) spend as much as a full working day per month chasing up unpaid invoices.
The new Prompt Payment Code (PPC) is one of the Government’s most recent implementations and has been signed up to by more than 1,800 firms, committing them to paying invoices within 30 days.
However, David Thomson, CEO of Close Brothers Invoice Finance, believes that small and medium-sized enterprises (SME) are still too easily avoidable when it comes to paying them on time.
“The UK’s record on late payments is very poor – while other countries have seen late payment rates come down as their economic fortunes have improved, the UK’s business culture seems to be one in which it is acceptable not to pay small businesses on time,” said Thomson.
“Small businesses often lack the power to hold large organisations to account and need greater support from Government to help them do so.
“SMEs need better statutory protection and an independent champion prepared to take action on their behalf.
“Many SMEs feel very uncomfortable challenging larger businesses, on which they may be reliant for substantial amounts of revenue, over late payments; this is where regulatory action is essential.”
Margot James, Minister for Small Business, Consumers and Corporate Responsibility, agrees that a “culture change” through the PPC is vital to stamp out tardy payment culture towards small firms.
“The businesses signed up to the Code commit to demonstrating the gold standard of payment practices and it’s great to see so many of Britain’s leading household names on the list,” said James.