IMN Content - Lifestyle and Consumer Content

Small Businesses Threatened by Late Payers

New research has revealed that 71% of local firms have suffered from late payments over the last 12 months.
Finance - 15 April 2010   Download IconContent available for download:  
Audio | Interview with Peter Ibbetson and Stephen Alambritis. Peter is the Chairman of Small Business at NatWest and RBS and Stephen is from the Federation of Small Business| Login to Download

You are missing some Flash content that should appear here! Perhaps your browser cannot display it, or maybe it did not initialize correctly.
  News Hooks:

New research has revealed that 71% of local firms have suffered from late payments over the last 12 months, which has cost them an estimated £62.87 billion. 235,000 local businesses claim that this has adversely affected their business.

Small businesses are hardest hit with one in five (20%) businesses with an annual turnover of between £250,000 and £500,000 suffering with the problem of late payment; compared with just one in fifteen (7%) medium and large businesses.

Despite these problems, the research reveals that less than half (45%) of local businesses have taken measures to improve their cash flow. Of these businesses, around one in ten (11%) have hired an in-house credit controller; 9% have used invoice discounting and 8% have used invoice factoring.

. Introduction:

Most local businesses have payment terms that include a deadline but despite this, almost three-quarters admit that they have clients delaying payment for services and products they’ve received. Where funds are expected to come in but don’t, small businesses have to use their own money to cover the delay. This cash is important for keeping the company in the black which in turn keeps their employee's jobs secure. In reality, local companies don’t have the time or resources to chase these payments, they just want to focus their resources on trading successfully.

So is there anything businesses can do to prevent this situation occurring?

Joining us in the studio is Peter Ibbetson, Chairman of Small Business at NatWest and RBS and Stephen Alambritis from the Federation of Small Business.

. Suggested Questions:

How many businesses in our area have wasted time chasing debts in the last 12 months?

Why do you think that local businesses have such a problem with late payments?

What effect can this have on local businesses?

Which industries are particularly affected by late payments?

What advice do you have for businesses that are struggling with late payments and what action can they take to prevent it from happening?

Where can we find more information?