Late payment threat to small business

UK businesses saw their financial health deterioate in the six months to April 2011 in the face of surging operating costs and a fall off in new orders, according to new research.

The latest SME Trends Index, which surveys almost 600 business owners on bad debt levels, tax arrears, turnover and profitability to calculate financial health of firms in the UK, saw 76 per cent of those taking part reporting a rise in operating costs and only 58 per cent winning new contracts.

Those companies with a turnover of more than £3 million remain significantly stronger than businesses turning over less than £500,000, while the best performing regions included eastern England and the South East, according to Hilton Baird Financial Solutions.

Meantime, bad debt has prompted a business lobbying group to call on all smaller suppliers to anonymously ‘name and shame’ late paying companies.

Many suppliers fear fear tackling late payment by especially large customers will lead to unwelcome reprisals and cost them business, but The Late Payment Hall of Shame, introduced by the Forum of Private Business (FPB), allows them to identify late payers yet still protect their identities.

Jane Bennett, FPB head of campaigns, was quoted on website smallbusiness.co.uk as urging all small suppliers who have suffered to come forward and provide evidence that they have been squeezed, and FPB would absolutely guarantee their anonymity.

She said: ‘Late payment destroys companies yet it is often seen as normal practice by many big supermarkets and other companies, which believe it is acceptable to create lines of credit at the expense of their smaller suppliers. We certainly do not.’

Bennett added that previous initiatives to address late payment have failed, and that the FPB is committed to helping small firms and the economy as a whole by building a ‘momentum for change’, that involves ‘shedding light’ on the ‘epidemic of late payment’ in the UK.

What are your thoughts? Have you been squeezed by a large customer to accept late payment? Do you think your business is being put at risk by having to offer extended lines of payment?

 

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About Wanobe, the business knowledge network
Writer, journalist and broadcaster, sixty-something David likes nothing better than being with family and friends, eating out and drinking great wines, and scuba diving.

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