According to a recent research by business software and service provider Sage who spoke to 457 small business owners in the UK, late payment had marginally improved compared to 12 months ago, however it underlined the continuing failure in Britain for suppliers to be paid on time.
The report also indicates that almost half (47%) said they had wait 90 days or more. While this is an improvement from 12 months ago, (in 2014 72% had experienced 60 days or more; 57% 90 days or more) the results point to a worrying trend which continues to hit the cash flow of thousands of firms across the UK.
The study also mentions that the direct impact of this late payments include major cash flow difficulties for 1 in 10 firms (12%, compared to 11% in 2014) and being unable to pay their own suppliers, compounding the problem (12%). A small numbers of businesses also reported even more serious situations, with some being late paying wages to staff (3%), being unable to pay overheads (rent, others, 2%), or having their own credit rating downgraded (2%).
With small businesses reporting that larger businesses have extended their payment terms (10% reporting terms extended by 30 days extra, and 7% by a further 45 days) it’s clear that small business are facing a threat to their cash flow and continued existence from onerous and over-long supplier payment terms, the report adds.
The research concludes that the Prompt Payment Code can only go so far. In the most recent survey a quarter (26%) claimed that they had not heard of the government backed initiative to encourage suppliers to pay on time. On top of this, only 8% of businesses described the code as ‘effective’.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now