Late payment problems getting worse for a third of small firms
But just 10% charge interest on overdue invoices, according to new report
The issue of late payments has worsened for more than one in three small firms over the past six months, according to a new survey.
The study based on responses from more than 1,000 small-to-medium sized firms, also found that cashflow is becoming an ever bigger concern.
While 36% of respondents claimed that instances of unpaid or overdue invoices have increased since the start of 2011, 30% claim their cashflow has become less stable within the same period, found the research by software provider Sage.
Yet, despite the escalating late payment problem, only 10% of respondents said they would charge interest once an invoice became overdue – suggesting many companies need to tighten up their debt management strategy.
Sage spokesperson Michael Barber said:
“One of the key lessons that many small businesses have taken from the recession is the importance of healthy cashflow. But as the results of our research show, tracking and chasing late payment remains a major issue for many SMEs who have seen their situation deteriorate in the past six months.
“Late payments are a fact of life for many small business owners, but good management can ensure they do not have a damaging effect on the business’s overall cashflow.”