Ministers urged to tackle late payments

News Article - 09 June 2009
Category: Business

The government is being called upon to address the problem of late payments to small and medium-sized enterprises (SMEs) from big corporate businesses.

SMEs can find themselves struggling financially if large clients withhold payment and many invoices can take more than 100 days to settle.

A number of firms have had complaints made about them, including retail giant such as B&Q, Selfridges, Alliance Boots and Debenhams, Accountancy Age reports.

According to Martin Williams, managing director of credit reference agency Graydon, the problem of late payments to smaller firms is growing, particularly among retail companies, with businesses waiting more than three months for bills to be settled.

The Competition Commission has recommended creating a new ombudsman post to ensure that supermarkets treat suppliers fairly and do not pass on excessive costs and risks to them.

Recent research by Smith and Williamson found that many SMEs are struggling because of late payment and the move by UK retailers to extend invoice terms to 96 days or push through discounts.

Credit card demand among small businesses has risen sharply in response to the recent economic slowdown and payments rising from 17 to 22 days late on average.

Small businesses can implement accounts software packages to help them to keep track of their finances more effectively.

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