Poor payers 'biggest threat' to businesses
Article Date: May 15 2007Late payment is costing the UK economy up to £20 billion per year, according to a survey conducted by the Credit Management Research Centre. Just over a third of companies responding consider late payment to be the biggest threat to their business.
Mark Flower, managing director of trading register Prompt Payer, which commissioned the survey, comments that 'late payment affects every company, harming reputation and damaging business relationships.’ This is borne out by findings indicating that a quarter of all insolvencies result from invoices being paid late.
The research reveals that only 21 per cent of businesses use statutory penalties to enforce late payment. This may explain why legislation such as the Late Payment Act of 1998, which gives businesses the right to claim interest on late payments, has done little to improve the situation.
The most common reasons for late payment are intentional delays on the part of the payer (35 per cent of cases), cash flow difficulties (23 per cent) and administrative inefficiency (17 per cent), according to European Commission research.
