Late payments causing cashflow trouble, says Lloyds report
Nearly a third (31 per cent) of small businesses in the West Midlands have suffered from cashflow problems in the second half of 2010, according to research from Lloyds TSB. Almost half of small businesses in the region cited late payments as the main cause, suggests the report.
The data, taken from the bank’s bi-annual ‘Business in Britain’ survey, shows that 47 per cent of companies surveyed in the West Midlands blamed delayed payments for putting pressure on their cashflow.
‘Business in Britain’ polled 1,800 firms, the majority of which have a turnover of less than £15m.
Martyn Freshwater, regional director for Lloyds TSB Commercial Finance in the West Midlands, said “Late payments impacting negatively on a firm’s cash flow is a persistent problem for businesses and, with economic growth expected to slow down in the first half of 2011, it is essential that companies keep a tight control over credit terms.
“Against this economic outlook, we expect to see products such as invoice finance, which have established themselves as mainstream financial instruments, continue to be widely utilised this year.
“Since this form of finance is directly linked to issued invoices, this ensures that if a firm raises its prices to account for mounting taxes and inflation, the amount of funding available to invest in growth and development will also increase.”
Nationally, companies in the communications, energy and construction sectors are most likely to be stung by late payments (83, 75 and 69 per cent respectively).
Comparatively, firms operating in the hospitality and leisure industry were least likely to cite late payments as a cause of cashflow problems (38 per cent).
