Business advice and support group Business West has called on firms to work closer together to ease the crippling impact of late payment on small businesses.
The West’s councils could also help by switching to electronic invoices to speed up payments to local suppliers and the Government could do more to encourage best practice.
Business West’s suggestions follow the results of the latest British Chambers of Commerce (BCC) survey revealing that 94% of businesses have had to wait for payment beyond the usual time limit and one-in-four say more than 40% of all their invoices are late – a figure described as “staggering” by Business West managing director Phil Smith, pictured.
However, the survey, conducted with Business West which also runs the Initiative in Swindon, found that 79% of West businesses would not consider charging interest on late payments for fear of damaging their relationship with the customer or of losing future business.
Some 62% said that private sector businesses are the more likely to pay late, dropping to 34% for the public sector. Thirty-eight per cent of businesses themselves admit to paying late ‘sometimes’, ‘frequently’ or ‘always’. When asked when they might pay late, 35% would do so to help cashflow and another third because they would be unable to pay suppliers until they had received payment from their own customers.
The survey of more than 5,000 businesses also showed different methods of payment between businesses, although 85% are paid using BACs, with 95% of businesses preferring to be paid this way.
The main problems caused by late payments were the distraction from delivery and other business roles (66%), the impact on business relationships (41%) and restricting business growth (32%), the survey results showed.
Mr Smith said: “Businesses must work together with the Government to ensure late payments become less endemic across the supply chain. Measures such as a kitemark for prompt payers, alongside moves to encourage local government to use e-invoicing, could mean fewer businesses struggling with cashflow problems.
“Cashflow has been an increasing problem for many businesses since 2008, when the downturn led to many firms being unable to access working capital.”
