This consequence of late payment was second only to the inevitable need to spend more time chasing customers for payment. In total, 88 per cent were adversely affected by late payment last year, with businesses commonly having to increase borrowing, pay HM Revenue & Customs later (19 per cent) and even turn away new business as a result.
To compound matters further, 27 per cent revealed the most common late payment excuse they received was that customers were waiting for their own customers to pay.
Managing Director of Hilton-Baird Collection Services, Alex Hilton-Baird, said: “The extent to which a single late payment can impact upon the supply chain is a major concern. While it’s obviously going to damage the supplier’s cash flow, it’s clear that many are being left with little option but to fight fire with fire.
“With no credible sanctions in place – statutory interest is still vastly underused and the less said about the Prompt Payment Code, the better – businesses are commonly treating invoices as interest-free loans. It’s a deeply troubling situation.”
Another initiative being considered by the Business Department is to fine late payers. However, this survey found only 35 per cent of respondents to be in favour of such a move, with 55 per cent dismissing it out of hand.
Alex continued: “Even as a deterrent, fining late payers simply won’t work as, realistically, it will be left to the businesses themselves to enforce it. If they can’t collect an invoice, how much success will they have trying to impose an additional fine? In reality, it’s down to businesses’ credit control departments to ensure they’re doing all they can to protect themselves.”