Action needed on late payment, says FSB
Some small firms are having to wait up to four months for invoices to be settled by larger customers, the Federation of Small Businesses (FSB) has claimed.
Late payment accounted for the failure of 4,000 smaller businesses last year, the FSB said, while a third of the business group’s members have experienced increasing delays in the time it takes for bills to be paid.
As a result, the FSB is calling on larger companies and organisations in both the private and public sectors to sign up to the government’s Prompt Payment Code.
But the business organisation also wants more measures in place to combat the problem of late payment and the pressure this places on the cash flows of smaller firms.
Companies House, the FSB argued, should be given the power to name, shame and fine late payers. The government should also follow a move recently announced by the Scottish parliament that will introduce a new clause requiring timely payment to sub-contractors working on publicly funded projects.
John Wright, the FSB’s national chairman, 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.
“Larger organisations must be given a loud and clear message that they must stop using the recession as an excuse to use small firms as source of credit. 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.”