November 21 2016
A new report on late payment published by the Federation of Smalll Businesses (FSB) has called upon government to tackle the problem of late payment.
The report draws on a survey conducted by the FSB that found that:
a third of payments to small businesses are late
37% of small businesses have run into cash flow problems as a result
30% have been forced to use an overdraft
The average value of each late payment is £6,142
and perhaps most damningly of all, 61% of small businesses are paid late by big businesses.
The FSB estimates that if the UK could end late payment, that it would save 50,000 business failures each year and increase the economic output of the UK by more than £1billion.
The FSB calls on government to act to end the late payment culture in the UK, with a list of specific recommendations such as making it mandatory for FTSE 350 businesses to sign up to the Prompt Payment Code, giving the Small Business Commissioner a specific remit to address supply chain bullying, and suppliers being represented on big company boards. They also call upon the government to get on with appointing the Small Business Commissioner, a post that was first announced in July 2015.
Samantha White, Managing Director at My Credit Controllers says that there is a better way:
"The survey also shows that small businesses spend an average of 1.2 days a month chasing late payments from customers. This is time that could so easily be spent on more constructive activities such as developing the business or winning new customers.
If this is a picture that your business recognises, why not look into outsourcing your credit control?"
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