A recent study revealed that chasing late payments remains a “major headache” for Britain’s small and medium-sized businesses.
Research by recruitment firm Alexander Daniels has revealed that the practice is still a real problem, with firms having to spend large amounts of time chasing debts.
Nick Pearce, Alexander Daniels’ director, said: “Recent figures showed that more than three quarters of businesses are being forced to wait at least a month beyond their agreed contract terms before getting paid – hitting cash flow just as the UK economy emerges into full recovery.
“Although the current government has made some attempts to ease the problem it clearly remains a major headache.”
The Department for Business, Innovation and Skills (BIS) carried out a consultation earlier this year, asking business owners’ views on the best ways to tackle late payment and other unfair payment practices.
Ministers have acknowledged that the problem has a crippling effect on smaller companies, creating cash flow problems which are sometimes impossible to recover from.
Statistics from earlier this year suggested that late payments could be costing the UK’s SMEs up to £8 billion annually.
The problem is compounded by the fact that as many as three quarters of firms have no procedure in place for chasing bad debt and a significant majority hadn’t implemented an escalation process for late payments.