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The UK’s four million small businesses need to ensure their credit checking procedures are robust at a time when cash is tight, says law firm Mace & Jones.

Businesses are being urged to take a tough line on late payment, as the economic climate tightens with interest rates rising to combat increased inflation.

Delayed payment is now more of a threat to small firms following the Bank of England's decision to raise the base rate of interest three times in recent months to 5.25 per cent in an attempt to curb inflation, which recently has been running close to a three per cent upper limit set by Chancellor Gordon Brown.

‘The scourge of late payment already contributes to the death of an estimated 10,000 – 15,000 firms each year, with small firms owed an estimated £50 billion per month,’ says Mace & Jones partner Duncan McAllister.

‘Late payment should not be tolerated and can be tackled with an effective credit control system. Too many businesses are paying late to sustain their own cash flow, undermining their suppliers in the process. We advise businesses, large and small, to ‘get tough’ on this practice. That means thorough management including credit checks on new customers and even existing customers, offering incentives such as discounts for prompt payment and making customers aware of their obligation to pay with prompt invoices,’ he adds.

For more information visit The Better Payment Practice Group: www.payontime.co.uk