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Debtor sorrows for SMEs

Sep 02 2009

Time is money for SMEs

Late payments are continuing to hurt small businesses, with many having to wait up to four months before balances are settled, claims the Federation of Small Businesses (FSB).

Research by the FSB has found that approximately 4,000 business failures were caused by late payments last year.

FSB national chairman John Wright says: ‘Poor payment practices in both the public and private sector can drastically affect cash-flow for small firms at a time when business owners are doing their best to hold on to precious funds.’

According to the FSB, its members have complained about a number of larger companies extending their payment times, including delivery firm TNT, food producer Bernard Matthews and shopping website Amazon.

Adds Wright: ‘The FSB would like to see as many private and public sector organisations as possible signed up to the Prompt Payment Code to ensure we can put an end to this plague and change the culture of late payments for good.’

As the cash-flow of small businesses continues to be hit, a recent report from the Bank of England shows that lending to businesses dropped by £8.4 billion during the past month.

To find out more about the government's prompt payment code click here.

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