|By RealWire News Distribution||
|January 15, 2014 05:19 AM EST||
Sage research reveals late payment culture hitting SMEs
Newcastle, 15th January 2014: Nearly two thirds of businesses have experienced late payments of 90 days or more in the last six months, a shock study by business software and services provider Sage UKI has found.
Bosses of small and medium sized firms across the UK also gave a damning verdict for the Prompt Payment Code, established by Government in 2008 to tackle late payment, with only 5 per cent classing it as 'effective' or 'extremely effective'.
An overwhelming majority classed the code as 'ineffective' (38%), or 'extremely ineffective' (16%). The remaining 41% said they had not heard of the code, which points towards a systematic failure of the Government to get to grips with late payment.
The survey of nearly 600 business owners also discovered that as a result of late payments:
- One in ten (11%) suffered major cashflow difficulties. A third (33%) said they had experienced minor cashflow problems
- A knock-on effect in the supply chain, with 14% of firms unable to pay their own suppliers
- One in 40 firms (2.5%) were late paying wages to staff
Big businesses are the worst offenders for late payments, according to 45% of respondents. This was followed by small businesses (16%), the public sector (13%), and individuals (8%).
"It's time for the Government to roll up its sleeves and get on with clamping down on the notorious late payers which are starving smaller firms of cashflow," said Lee Perkins, Managing Director of Sage UK and Ireland's Start-up and Small Business Division, commenting on the findings.
"British businesses have given a damning verdict for the Prompt Payment Code which has proved toothless and ineffective. There has been plenty of rhetoric, but not enough action and firms are saying they are fed up.
"Thirty days is long enough, but it's absolutely criminal that the majority of firms experiencing late payments of sixty, or even ninety days."
Notes to editors
The survey spoke to 572 business owners and decision makers.
In the last six months, businesses said they had experienced late payments over these time scales.
- 30 days or more, 84% said yes
- 60 days or more, 72% said yes
- 90 days or more, 57% said yes
Businesses were asked if they felt the Prompt Payment Code, established in 2008 to help businesses get paid on time, is effective? Respondents answered as follows:-
- Yes, extremely effective, 1%
- Yes, effective, 4%
- No, ineffective, 38%
- No, extremely ineffective, 16%
- I don't know/have not heard of the Prompt Payment Code, 41%
Firms were asked, what one thing would you do to improve the Prompt Payment Code? Respondents answered as follows:-
- Tighter enforcement of the rules, 21%
- Make an example of firms who do not pay on time, 14%
- Greater punishment for firms who do not pay suppliers on time, 12%
- Support from Government to help cash flows, if firms fail to pay, 9%
- Other, 5%
- Don't know 39%
Firms were asked, from their experience, who are the worst offenders when it comes to late payments? Respondents answered as follows:-
- Big business, 46%
- Small business, 16%
- Public sector, 13%
- Individuals, 9%
- Other, 8%
- No problem with late payments, 8%
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