Three in five businesses are struggling with cashflow because their clients are delaying payments, and large companies are the worst offenders.
Three in five businesses are struggling with cashflow because their clients are delaying payments, and large companies are the worst offenders, according to a survey of 1,200 entrepreneurs from accountancy firm Tenon.
A third of respondents to the survey estimate that late payments cost them £10,000 a year in bank charges and the administrative cost of chasing clients for money. That excludes the practical difficulties of day-to-day cashflow control.
A majority (56 per cent) of those questioned say that late payments are likely to come from large companies, while 44 per cent point the finger at smaller clients. That gap is narrower in London, with 50 per cent blaming larger companies and 42 per cent smaller ones, and widest in the North of England, where the figures are 59 and 43 per cent respectively.
Nationally, 14 per cent of respondents accuse HMRC of delaying payment of tax rebates, while 13 per cent say local authorities are at fault. Councils in the North appear to be marginally slower payers, with 16 per cent of respondents from the region complaining of the problem, while in the Midlands and Wales the figure is 12 per cent.
Carl Jackson, national head of Tenon’s turnaround arm Tenon Recovery, comments, ‘Businesses must adopt a responsible attitude towards late payments to avoid the domino effect of business collapses that they can cause.’
Tenon estimates that the typical sum due in late payments rose by a third in 2008, bringing the average amount owed by UK companies to around £40,000.
