Sibley Bros LLP
Construction Industry Accounts Software
Sibley Bros LLP
Late payments are at all-time high
A group of organisations including the Federation of Master Builders, the Federation of Petroleum Suppliers and the Forum of Private Businesshave joined together to urge the government to call for a plan of action to address the growing problem of late payment in order to help small firms survive, grow and drive economic recovery.
Only 4% of subcontractors in the Construction Industry are getting paid within 30 days, despite it being mandatory on all government contracts.
Recent research from the payment body Bacs shows that late payment to small businesses, including building contractors and subcontractors, has hit an all-time high with 51% of surveyed companies reporting that the problem has become worse during the past year, 45% that it could threaten their ability to invest in their businesses and 20% that it could prevent them from continuing trading. Figures show that small and medium-sized enterprises are now owed a total of £33.6bn in outstanding invoice payments – a rise of 10% in the last 12 months and the highest figure since records began in September 2007.
Government is urged to bring forward the new late payment EU Directive, which introduces a minimum fixed amount of compensation for late payment and tightens the time period for payment.
"There is mounting pressure on the government to crack down on the growing corporate late payment culture, which is already a huge problem for small businesses and is in danger of becoming endemic," said Phil Orford, chief executive of the Forum of Private Business.
"In addition to the actions we want ministers to take, we recognise there are proactive steps available to business owners, including implementing proper credit management and credit checking procedures, but there is clearly a culture of fear when it comes to naming and shaming large late payers."