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Nearly one in four of businesses call late payment a “serious problem”

24 April 2013

Nearly one in four of businesses call late payment a “serious problem”

A summit in central London today (24 April) discussed the options for business on late payments after new research showed the damage it is causing to the economy.

Research, from commercial credit referencing agency Graydon, showed more than half of businesses (51%) found late payment of invoices was a problem with 23% calling it a “serious problem”.

The report, drawn up from interviews with 500 UK small businesses, also showed the “domino effect” of late payments on the supply chain with 56% of business not paid on time admitting they had to pay a supplier late in turn.

As well as that 45% of businesses surveyed said late payment had eroded their profits and 23% claimed it undermined their ability to invest in growth through innovation.

Gordon Skaljak external spokesman for Graydon speaking at the event said: “The heart of the issue is business feels they don’t have any genuine recourse over late payments.

“Business is pragmatic and prepared to refuse to complete work and chase payment.”

Skaljak went on to explain where there were options for businesses they were often “afraid” to use them due to the effect ti could have on client relationships.

He added: “It’s too simplistic to see late payment as one homogenous group. The problem is with companies using their size to procrastinate on late payments.”

Andrew Van Der Lem from the Department for Business Innovation and Skill (BIS) recommended a three track approach.

He said: “Firstly, government can set an example BIS is a large organisation with several thousand employees and in 95% of cases we pay in five days.

“Secondly what can government do to incentive payments, including looking at initiatives like the prompt payment code?

“Thirdly, building capacity in small firms … many don’t know what’s available to them.”

Philip King chief executive of the Institute of Credit Management (ICM) urged businesses not to “rollover” on late payments.

He said: “Don’t just rollover ask what’s in it for me? There needs to be a cultural change and business needs consider turning down work sometimes.”

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