Suppliers reluctant to act on late payments
Suppliers are waiting more than 3 months on average before threatening legal action over late payment, according to new figures.
Research by commercial debt recovery firm Lovetts shows that businesses are reluctant to take action against late-paying customers. During the first quarter of 2015, businesses have waited for an average 103 days from the invoice date before attempting debt recovery. This is a 24% increase from Q1 2014 when the average time was 83 days.
The findings come after prominent industry bodies launched campaigns to crackdown on the culture of late payment.
A survey by the Forum of Private Business (FPB) found that 51% of small businesses have experienced problems with late payment and 46% feel unable to negotiate better supplier terms.
FPB chief executive Phil Orford has called for “affirmative action” to be taken against large businesses that delay payment to their suppliers.
A separate survey by the Federation of Small Businesses (FSB) revealed a severe lack of confidence in the Prompt Payment Code. Just 21% of surveyed FSB members believe the code will solve the problems of late payment.
John Allan, national chairman of the FSB, has urged the government to launch an independent inquiry in order to force a “cultural shift” in payment practices.
Commenting on the latest figures, Charles Wilson, chief executive of Lovetts, said:
“The scale of the late payment scandal in the UK is getting worse not better, despite the high profile campaigns to stamp out the problem.
“As the business environment improves, it seems that British businesses are reluctant to rock delicate client relationships by threatening legal action.
“It’s vital that businesses act early on invoices rather than delay.”
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