In contrast, ABFA found that companies turning over ?500m or more have seen payment waits fall to a current level of 47 days.
In 2009, businesses with turnover of below ?1m could expect to be paid in 61 days. This rose to 71 days in 2014 and by a further day this year. Despite firms turning over more than ?500m being paid in 39 days in 2009, those in the space are seeing money a day earlier than last year. The analysis of 130,000 UK businesses produced ?disappointing? figures on waiting times, ABFA said, and have come about despite the economic recovery ?gathering pace?. Commenting on the figures, Brendan Flattery, president of Sage Europe, said: ?The health and vitality of the UK?s small business sector is crucial to the economic future of this country, and of all the challenges faced by business owners, the most persistent and damaging is late payment from customers. ?Our own research has found that small businesses are owed on average more than ?30,000. Many small businesses are treading water to avoid insolvency, and this plague then affects the entire supply chain.? Read more about late payment:
In the aftermath of the May general election, which returned a majority Conservative government, new business secretary Sajid Javid unveiled the Small Business Conciliation Service ? aimed at sorting out disputes between SMEs and customers over late and extended payment. Giving his thoughts on the initiative, ABFA chief executive Jeff Longhurst said: ?Whilst we fully support it, it remains to be seen whether the launch of another mechanism for SMEs to report their clients for late payment will have more of an impact on the issue than previous efforts.? ?Businesses already have means of redress for late payment, such as the ability to charge interest, but this is a route that many are reluctant to take if they want to get repeat business from clients. This boils down to the inequality between large and small businesses and we need cultural change.? Prior to the Small Business Conciliation Service, the former coalition government had taken to naming and shaming businesses which were abusing payment terms. In January, ahead of a debate on supply chain bullying, MP Debbie Abrahams stated: ?Late payment is something that CEOs and board members in big businesses can influence and I have always maintained that a late payment culture in a company is set at board level. ?That makes it a leadership issue and it?s time that deliberately paying late, finding ways to pay late, or making unilateral changes to pre-agreed contracts is seen as being as unethical as tax evasion.? Longhurst added: ?Though efforts to improve the situation are laudable, the reality is that small businesses that don?t want to jeopardise their customer relationships often feel they have no option but to just put up with poor payment practices.?
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