Late payment could cost East Mids businesses £84m
East Midlands businesses could lose up to £84m per year chasing customer late payment, according to Bibby Financial Services.
A survey of business owners and managers has revealed that firms in the East Midlands spend a total of 738,000 days a year chasing customers for payments which equates to an annual cost of £779 per business.
The report also revealed that more than a third of businesses in the East Midlands have been chasing much harder for payment over the last year – despite the UK economy returning to growth.
Unfortunately, the situation could get worse if the government repeals the pledge by former Chancellor Alaistair Darling and increases the government’s payment terms on invoices from five days, as announced in March 2010 to assist the cash flow of small businesses, to 30 days to save the government millions of pounds.
David Webb, Bibby Financial Services spokesperson for the East Midlands, said: “Firms cannot keep stalling payment and expect it to have no consequence because a delay in collecting in outstanding monies will have an effect on any business regardless of its size. Our research demonstrates that late payment continues to be one of the biggest challenges faced by the region’s small and medium-sized businesses, and this challenge will become harder if the government’s payment terms are extended to 30 days."
