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Keywords: electronic invoicing, einvoicing, e-invoicing, Graydon UK, Forum of Private Business, FPB
Susie West | News | 25 April 2012
More than half (51%) of small businesses have found the late payment of trade invoices to be a problem, according to a new report.
A survey of 500 British small firms by Graydon UK and the Forum of Private Business (FPB) revealed that despite the prevalence of late payments, few businesses are doing anything about it.
Of the businesses that cite late payments as a problem, almost a quarter say it is a serious issue for them and 16% have even been put out of business as a result.
For many firms experiencing problems, 56% have in turn been forced to pay their own suppliers late, while many others reported that it has eaten into their profits or hindered their plan to grow as a business.
Fewer than half of businesses say they go through formal procedures to ensure that late payments are kept to a minimum. Indeed, only one-third of companies offer a prompt payment incentive and just one-quarter view invoice discounting as a solution to the problem.
Around 40% of businesses ensure they have a reserve in the bank to offset late payments, the survey found.
e-Invoicing is one way to ensure that late payments are reduced as it speeds up processes, lowers the costs of invoicing and adheres to preferred lists of suppliers that are known to be reliable.
The survey also found that a number of businesses are witnessing customers changing their payment terms without any consultation or notice, an issue cited by 65% of respondents.
While 23% of businesses said that customers had withheld payment in order to question quality or delivery times, 14% said suppliers had demanded discounts for prompt payment that had not been agreed before an order was made.
"The research shows just how damaging the late payment of invoices is for small firms across every sector," commented Phil Orford, Chief Executive of the FPB.
"It decimates cash flow, kills growth and innovation and ultimately forces businesses to the wall."
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