Small firms waiting months for payments

Small firms are waiting up to four months for invoices to be paid by several big brand names, Federation of Small Businesses (FSB) research has revealed.

Around 4,000 business failures were caused by late payments last year and one in three FSB members are waiting longer to be paid during the credit crunch.

A number of small businesses have contacted the FSB over the last year naming several large companies extending their payment times.

The FSB has written to these companies to explain how badly late payment affects the cash-flow of small firms, particularly during this economic period, and is urging them to sign up to the Government-backed Prompt Payment Code.

The FSB is urging businesses and agencies in both the public and private sector to sign up to the Prompt Payment Code to highlight best practice and help boost the cash-flow of small firms during these tough times.

The FSB is also calling for Companies House to be given the power to name, shame and fine late payers and is calling on the Government to take on board a measure recently announced by the Scottish Government –a new clause requiring timely payment to sub-contractors working on Government projects.

The FSB will be discussing this issue at an economic summit attended by politicians and business representatives in London on September 2 aiming to change the damaging culture of late payments.

John Wright, National Chairman, Federation of Small Businesses, said:

“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.

“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.”

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