FSB PRESSES LATE PAYMENT CAMPAIGN
Few problems are more vexing for business – and potentially fateful – than late payment.
It has long been the scourge of SMEs – yet high sounding task forces and iniatives by government ministers seem to make little impact.
Indeed, the problem is getting worse, not better, according to research released earlier this year from B2B business lender MarketInvoice – and the majority of invoices are now settled late.
It tracked more than 30,000 invoices across five years and 80 countries and found that some 62 per cent of UK SME’s invoices are paid after the due date, with one in five not settled until two weeks after they fall due.
South of the border, a small business commissioner was set up to help firms tackle the issue of the billions of pounds in late payments for goods and services, under government plans.
It estimates small firms are owed £26 billion in late payments - and chasing debts costs them millions of pounds more.
Former business minister Anna Soubry said the role would tackle the power “imbalance” between small and large UK businesses. But she’s come and gone.
More recently a survey found that nearly a quarter of Britain’s small and medium-sized businesses have been pushed into financial crisis because of late payments.
The research, commissioned by electronic invoicing network Tungsten, revealed that the average small-to-medium-sized enterprise is owed £40,857 in unpaid invoices and £20,937 of that total is overdue.
When extrapolated across the entire UK small business community, totalling 5.2m firms, this could mean an unpaid bill of £212bn.
“An unpaid invoice can mean the difference between a successful month of trading and a dangerous financial shortfall,” said Tungsten chief executive Richard Hurwitz. “In the worst case it could lead to insolvency.”
The issue was found to be most acute in the technology sector, where almost a third of all businesses had been impacted financially by late payments from customers.
Now the Federation of Small Business Scotland is weighing in with a report due out tomorrow showing that Scotland’s late payment culture is killing thousands of businesses and causing hundreds of millions pounds of economic damage.
Its analysis shows that if Scotland adopted the payment practices of Norway, 2,075 fewer firms would close annually, resulting in an estimated £134 million economic boost.
Scot-Buzz co-editor Bill Jamieson wishes its campaign every success and we will be keen to follow up with future articles on the website.
Bill is self-employed and dependent on his freelance earnings to keep Scot-Buzz going. But he has been battling to receive a payment that is now three months overdue – and the culprit is a high-profile Scottish government agency!
Politicians are keen to talk the talk – but when it comes to making a serious dent in the problem the forces of inertia close in.
It’s all very well for Holyrood to make pious noises about clamping down on late payment. But starting with the Scottish government’s own agencies would be a useful first start!
