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Late payments cost firms £1.9bn

12 April 2010

Late payments cost firms £1.9bn

UK businesses are wasting £1.9bn chasing late payments, according to research by business finance specialist Bibby Financial Services.

Despite the economy officially returning to growth, 35 per cent of businesses have reported customers are taking longer to pay invoices than 12 months ago.

And some sectors with greater exposure to the downturn are suffering more than others. Bibby said 47 per cent of manufacturing and construction firms saying that customers are taking longer to pay than a year ago, compared to 36 per cent of firms in business services.

Edward Rimmer, Bibby Financial Services’ UK chief executive, said: "Across this nation, businesses are fighting for survival with sustaining a healthy cash flow one of the biggest challenges."

Twenty per cent of companies say they are chasing invoices three times or more, and a staggering 48,000 businesses have had to follow up invoices more than 11 times – a waste of time and money for firms.

Chancellor Alistair Darling pledged in his Budget last week to ensure the Government will pay 80 per cent of its invoices from small business within five days, down from ten days. Small and medium-sized businesses are currently owed £30.4bn in outstanding payments, according to Bacs.

Rimmer added: "The Chancellor’s pledge to pay 80 per cent of public sector invoices within five days is a worthy goal but it must become a reality. If Alistair Darling really wants a lasting legacy, he should urge the private sector to participate in an invoice amnesty, pay all outstanding invoices and then adopt a new prompt payment culture."

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