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Late payments to small businesses “standard practice”

Late payments from clients is “business as usual” for many small business owners, according to research from the Money Advice Trust.

The charity runs the Business Debtline, where nearly half of callers have experienced problems with late payments from customers.

 

The survey of Business Debtline callers showed that businesses affected by late payments would experience cash flow problems. These problems have a negative impact on the viability of the small business and the personal wellbeing of the owners, too.

 

Of those surveyed, 82 percent strongly agreed that late payments caused cash flow problems and 58 percent said that late payments was the cause of their financial difficulties.

 

Some 62 percent of callers who experience late payments said they do so fairly or very often. A further 42 percent spend more than a tenth of their working time chasing late payments, which can lead to negative effects on the business’s productivity.

 

Joanna Elson OBE, chief executive of the Money Advice Trust, said: “The government has already taken several positive steps on late payments, including requiring mandatory reporting on the payment practices of large business, and creating the Office of the Small Business Commissioner.

 

“Stronger actions are necessary, however, to deliver the scale and pace of change required in payment practices. We need to fundamentally change the culture – so that late payments are no longer seen as an acceptable business practice.”

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