Earlier this year, a report compiled by credit agency Graydon and the Forum of Private Business (FPB) revealed that around one in six companies have almost gone out of business as a result the late payment of invoices.
More than half of companies (51pc) said late payment affected their trading, a survey of 500 small business owners found, while 23pc identified it as a ‘serious problem’ for them. A knock-on effect of late payments is that over three quarters of the respondents who said that they paid their suppliers late did so because their own customers were late in paying them – there was a domino effect down the supply chain.
Today, the Government announced new measures to tackle the blight of late payment. Members of the Small Business Economic Forum (SBEF) have all signed an agreement to work together to develop new measures to ensure that payments are secured and made on time.
Business and Enterprise Minister and Chair of the SBEF Mark Prisk (pictured) said:
‘Large firms have a responsibility to ensure their suppliers are paid on time. These payments are vital to businesses in the supply chain which rely on contracts with larger firms to thrive and need confidence that they can plan for the future without worrying that payments will be late.
‘Working with industry bodies to encourage their members to sign the Prompt Payment Code and commit to making payments on time is a significant step forward. We mustn’t be complacent and stop here but I hope to see businesses across the country joining us to help ensure payments are reaching suppliers on time.’
The statement signed by the SBEF encourages their members to:
· Proactively agree payment terms before delivering orders.
· Raise complaints over late payment from Prompt Payment Code signatories and use legislation already in place to pursue late payers.
· Use electronic invoicing where possible.
Any businesses who are facing difficulties because of late payments may also like to look at the Get Paid! Booklet which offers practical advice on how to tackle the problem.