Chrissie Duxson of the Federation of Small Businesses (FSB) reports small firms’ lack of confidence in the Prompt Payment Code:
New research published by the FSB shows that the Government’s foremost tool for addressing the UK’s deteriorating payment culture does not have the confidence of much of the small business community.
The FSB’s latest research found that only one in five (21 per cent) FSB members are confident the Prompt Payment code will be enough to address the UK’s poor payment culture.
When asked if they would support a full and independent inquiry into poor payment practices, more than half (60 per cent) of businesses supported the proposal. This new data helps to illustrate the problem; two fifths (39 per cent) of businesses questioned were on average offered terms longer than 30 days for payment. On top of excessively long payment terms, 43 per cent of firms said they have waited over 90 days beyond the agreed payment date before they got their money.
The impact of this can be devastating on a small business. Tom Head of Head Mann Associates Ltd based in Leamington, whose standard payment terms are 30 days, said: “It is not untypical for us to have to wait 90 days for payments and it can be greater.”
As part of the survey, FSB members also gave reasons why their customers paid late. The top five reported reasons were: no excuse or justification (49%); internal invoice processing issues caused a delay (35%); the customer extended the payment terms without consent (34%); invoice was lost or misplaced (33%); invoice was never received (31%).
John Allan, national chairman of the FSB said: “If businesses do not get the money they are owed, they may not be able to pay their staff, invest in their business or pay their own suppliers.”