Small businesses are losing patience with late payers, with most prepared to sever ties with tardy customers, new research has found. A survey carried out by the Better Payment Practice Group (BPPG) found that over two thirds of bosses said that they would not deal with a late paying customer in the future.
This new research indicates that firms are starting to challenge the widely accepted fact that not settling debts on time is an everyday part of business life.
Firms have to date been reluctant to use late payment legislation introduced last year, which allowed companies to take debtors to court to claim compensation. But late payment causes thousands of businesses to go bust every year, with most small firms unable to cope with the disruption to cash flow.
Worrying research by BACS earlier this week found that a quarter of employers could not pay employee wages if debts were not settled within a month.
The BPPG said that small firms should have a clear internal policy on late payment to improve communication and avoid lengthy delays,
Rene de Sousa, of the Chartered Institute of Purchasing and Supply (CIPS) said that it’s important that small businesses themselves do not fall behind with payments to suppliers: "Businesses need to resist the temptation to lean on suppliers for credit, and recognise instead there are often real financial advantages to paying on time, such as preferential rates or service for prompt payment."