Firms collapse due to late payments, according to research

| April 15, 2010 | 0 Comments

A report by RBS and Natwest has found a growing number of small and medium-sized firms are suffering as their customers make late payments.

While late payments can be a major headache for many companies, it can be particularly harmful to SMEs, who rely on regular incoming payments.

If payments do not arrive on time, companies have to use their own funds to cover the delay.

According to the Federation of Small Businesses (FSB), approximately 4,000 firms collapsed in 2008 as a result of late payments.

In the last year alone, almost three-quarter of firms have suffered from late payments, according to research.

The research found that UK firms were owed around £62 billion in bills that were unpaid beyond the agreed timescale. Around a quarter of this was more than 120 days overdue.

Peter Ibbetson, Chairman Small Business, NatWest and RBS comments: “Bad debts and late payment of invoices are endemic problems for UK businesses. For more than one in ten (12%) firms, over 60% of all their invoices are paid late, causing major cash flow problems for many.”

However, Mr Ibbetson points out that there are services available to help companies alleviate the problem of late payments.

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