The survey by commercial credit referencing agency Graydon UK, in partnership with the Forum of Private Business (FPB),canvassed the views of 500 UK small businesses. It found that 53% of construction companies cited the late payment of trade invoices as a significant problem.
While 5% of retailers and 19% of manufacturers had almost gone out of business as a result of late payment, in construction the figure was 31%.
Underscoring the ‘domino effect’ of late payment down the supply chain, 69% of construction businesses admitted paying their own suppliers late.
According to Graydon UK, the research shows that businesses that embrace credit control procedures of some form are significantly less likely to suffer as a result of late payment. But only 44% use formal credit control procedures, with 38% instead relying on a mix of formal and informal processes and 16% juggling payments on an ad-hoc basis.
FPB chief executive Phil Orford said: “The research shows just how damaging the late payment of invoices is for small firms across every sector. It decimates cash flow, kills growth and innovation and ultimately forces businesses to the wall.
“We need to do two important things – first, communicate to business owners exactly what they can do proactively to minimise late payment, including putting in place robust cash flow management procedures and even simply invoicing properly and on time, then we need to provide the support and services they need to make tackling late payment a standardised business process.
“Second, we need to persuade large corporations to embrace paying their suppliers on time and in full, avoiding the temptation to impose damaging, retrospective changes to terms and conditions, so that prompt, proper payment washes down the supply chain.
“These are the aims that are squarely in our sights and we are committed to working with the government and other agencies in order to achieve them.”