With many smaller firms facing financial hardship because of spiralling late payments, the Forum of Private Business (FPB) is advising members to take advantage of its partnership with Cattles Invoice Finance, the award-winning finance provider, to help protect their cash flow.
New research from BACS payment services has shown that, although the number of businesses in the UK dealing with late payments has fallen – from 59% in 2006 to 51% in 2007 – total late payments increased by £2.6 billion to £18.6 billion over the last year. Small firms are each owed an average of £30,000 at any one time.
In a recent survey carried out by the FPB, almost three quarters (74.7%) of respondents said that late payment severely affects cash flow and poses a ‘considerable threat’ to the viability of their businesses. Delays caused by big business were deemed a particular problem for smaller firms.
“Late payment continually features in the commentary that we receive from members,” said the FPB’s Research Manager, Rebecca Leavers. “It is important that small firms are released from this stranglehold in order for them to be able to compete more effectively with bigger businesses.”
Invoice finance is one of the FPB’s most popular products. The partnership with Cattles offers flexible funding solutions that can grow with businesses, providing discounts that save members an average of £3,000 in the first year. Firms can access up to 85% of the value of an invoice within 24 hours of it being raised, which means that they do not constantly have to chase payments and client relationships are not continually put under pressure.
Lynn Willrich, of DJ Willrich Ltd, an audio-visual specialist based in Brockenhurst, Hampshire, agrees that late payment problems – which she said have always been an issue in her industry – have become worse.
“At the moment it is causing us major problems to our cash flow – our suppliers are wanting their money earlier but our clients are paying us later,” she said. “The result is a bigger gap in the middle.”
Almost a third of respondents in the BACS survey said they could go out of business if faced with overdue invoices of up to £20,000. Businesses in Greater London suffered most, with 65% complaining that they found late payments a problem, being owed an average of £51,000. Firms in the north east have suffered least, with 42% experiencing late payments.