Forum of Private Business asks councils how long they take to pay suppliers
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...sector, as reported by 81% of small businesses, almost one in five respondents (18%) identified public sector organisations as poor payers.
The survey of 500 small business owners looked at payment culture in the UK. In all, 51% of companies cited late payment as a problem, 23% said it is a serious problem and 16% that they have almost been put out of business as a result.
Underscoring the 'domino effect' of late payment down the supply chain, meanwhile, 56% of those respondents not paid on time have, in turn, been forced to pay their own suppliers late. Further, 45% reported that late payment has eroded their profits and 23% asserted that it has undermined their ability to invest in growth through innovation.
Further, 65% of respondents reported customers extending their payment terms without notice or consultation, 27% said suppliers had universally changed terms and conditions and 25% that customers had withheld final payments without consent in order to assess the quality of work first.
In all, 23% of business owners said customers withheld payment in order to question quality or delivery times while 14% reported customers demanding discounts for prompt payment not agreed at the outset and 12% supplier credit withdrawn without notice.
The figures show that businesses which embrace credit control procedures of some form are significantly less likely to suffer as a result of late payment. Many small firms acknowledge that there are proactive steps they can take to minimise the problem.
Submitting invoices promptly is seen by 97% as the most effective method of minimising late payment, followed by telephone contact with a customer after an invoice has been submitted (79%), using credit checks (76%) and refusing to complete work in the future (61%).
However, less than half of respondents (44%) employ formal credit control procedures, with 38% instead relying on a... continued on page three >