Posted by Stewart Wilkinson, Partner
On 1 September 2016 Withy King LLP merged with Royds LLP. The trading name for the merged firm is Royds Withy King. All content produced prior to this date will remain in the name of the firms pre-merger.
Late payments can lead to insolvency for businesses
Late payments remain a concern for many small businesses, according to the latest research from national small business group the Forum of Private Business. In the organisation’s latest banking and finance survey, published on 22 April, 23% of members reported an increase in late payments over the past year compared with only 3% who reported a decrease.
A total of 29% had seen an increase in the average number of days beyond the deadline that a payment was made late. In contrast, only 8% reported a decrease. A total of 39% of businesses surveyed said they would like to see prompt payment better promoted, 37% would prefer to pay VAT on money once it entered their account rather than when an invoice was submitted and 36% wanted to see persistent late payers barred from government contracts.
Forum chief executive Phil Orford said: “Upwards of £30 billion remains tied up in late payments, costing a typical small business 130 hours a year to chase and meaning that a third are forced to seek external finance to cover the gaps in cash.”
The potentially serious impact of late payments was highlighted in April when a ComRes survey of members of insolvency trade body R3 found that 47% of corporate insolvency practitioners had seen at least one case where late payment was a primary factor in a business’ failure in the past 12 months. Overall, late payment by customers for goods and services was a major factor in one in five corporate insolvencies, according to the research.
Dealing effectively with late payments is crucial to maintaining the healthy cash flow that is essential for business survival. Our experts at Royds can provide the expert advice to support businesses in strengthening and enforcing late payment procedure and, where late payment problems have escalated, assist in identifying workable solutions. For more information, please visit or contact Stewart Wilkinson or Ashok Patel.
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