Wednesday 23rd April, 2014

According to the latest research from the Forum of Private Business, the continuing culture of late payment remains a concern for many small businesses, despite positive news on the UK economy.

The Forum’s latest banking and finance survey revealed that, 23% of members reported an increase in late payment over the past year compared with just 3% who reported a decrease.

29% have also seen an increase in the average number of days beyond the deadline that a payment is made late whilst 8% reported a decrease.

As the number of businesses seeing late payment as a serious problem has remained static, small businesses are still keen to see more measures to tackle the issue. 39% of businesses surveyed would like to see prompt payment better promoted, 37% would prefer to pay VAT on money that has entered their account rather than when an invoice is submitted and 36% wanted to see persistent late payers barred from government contacts.

Commenting on the results of the survey, Phil Orford MBE, Chief Executive of the Forum of Private Business, said:

"Improving cash flow is the likely cause for late payment issues remaining static, despite lengthening payment terms. However, upwards of £30 billion remains tied up in late payments, costing a typical small business 130 hours a year to chase and meaning that a third are forced to seek external finance to cover the gaps in cash."

"Government is mulling over responses to a recent late payment discussion paper, which revealed ample ideas for tackling the issue in a more robust manner including the reintroduction of compulsory reporting of company payment terms and practices, and annual checks for Prompt Payment Code signatories."