Late payments play a part in a fifth of insolvencies
A new survey has once again shown the impact that late payment can have on small businesses, with the trend thought to be a major factor in one in five insolvencies.
The latest research was carried out by the insolvency trade body R3, with the problem playing a major part in over 20 per cent of all company failures recorded over the course of the past 12 months.
The prior collapse of a key supplier or customer was also significant in a large proportion of cases.
Andrew Tate, R3’s president, said: “A business can have a great product and great staff, but if it doesn’t get paid for what it sells, or if it is over-reliant on one supplier or customer, things can go wrong very quickly.”
He added that a series of initiatives which had been designed to reduce the burden of late payment, particularly on smaller enterprises, did not seem to have addressed the problem so far.
Meanwhile a separate report has suggested that Britain’s 3.3million sole traders lose more than £8.1billion a year as a consequence of late or underpayment.
Simon McVicker, the director of policy at IPSE, a leading association for the self-employed, said: “Almost three-quarters of the disputes the self-employed have with clients are because of late payment.
“The Government must now get on with it and appoint a Small Business Commissioner of stature. We need a strong figure who can spearhead better payment culture.”