According to the latest research from the Independent Chartered Accountants of England and Wales (ICAEW), late payments are more of a problem for businesses than they were last year.
The latest ICAEW figures have revealed a concerning rise in issues with late payments with 24 per cent of small or medium-sized enterprises (SMEs) reporting that this is affecting their business more than it did a year ago.
The issue was found to be significant in six of the nine industries the figures focused on including property, business services, manufacturing & engineering, construction, retail & wholesale and banking, finance and insurance.
Late payments can have severe consequences for business owners themselves, as a significant number often use their personal savings or assets to cover shortfalls.
Previous research found that the average small British business is owed almost £25,000 in late payments with many being forced to wait around 40 days for payment.
Around 50,000 small firms go out of business because of late-paying clients, and it is a clear problem that needs addressing.
The Government has made positive moves in an attempt to tackle the issue, including the Prompt Payment Code and setting out the intention to improve its own payments performance.
In October 2018 it announced proposals to empower trade bodies, such as the Federation of Small Businesses, to highlight the worst public-sector offenders.
Michael Izza, ICAEW Chief Executive, said: “The Prime Minister has promised Brexit by 31 October and the overriding priority of his Government must be to get a good deal. More than anything else that will give businesses the stability they are crying out for.
“However, this feedback from our members, who advise businesses in every sector and level of the economy, reminds us that they face other challenges as well, many of which have little to do with Brexit – such as late payments and the regulatory burden.
“Robust Government action on these issues could make a real difference to the business environment, especially for SMEs, and would help to restore confidence and momentum.”