Almost half of small and medium-sized businesses have struggled with late payments in the last year, according to research by the Institute of Directors (IoD).
Of the 787 business leaders surveyed, 48% have faced issues with late payments since April 2017. About 3 in 10 (31%) said this was the result of an “excessively bureaucratic payments system” in the company being invoiced.
Others noted a disparity between the practices of smaller and larger businesses, with 23% claiming larger firms in their supply chain used “grossly unfair” terms or practices.
This follows the launch of the small business commissioner’s complaints handling service in December 2017, which was intended to help businesses resolve payment disputes. However, only 1% of respondents to the IoD survey thought mediation by the small business commissioner would be the best way to address late payments.
Edwin Morgan, director of policy at the IoD, said:
It is deeply disturbing that so many businesses have to struggle to claim the money they are owed. Chasing late payments can have a particularly damaging effect on small companies, sapping resources and hurting their productivity.
The government has a job to do to publicise the options that are out there, and we would also urge them to consider stronger measures to clamp down on the menace of late payment.