The UK is suffering from a so-called ‘late payments crisis’, with recent research suggesting that, on average, only 52 per cent of invoices issued by small construction firms and self-employed contractors are paid on time.
Worse still, more than a quarter (26 per cent) of small firms have been forced to wait between three and six months for invoices to be paid, while a further 10 per cent have encountered clients who have never paid them at all!
Late payments can have a number of worrying implications for small and medium-sized enterprises (SMEs) – causing cash flow complications and eating up business owners’ time, as bosses race around chasing unpaid invoices instead of focusing on the day-to-day running of their business.
Cash flow concerns, including the non-payment of invoices following the collapse of Carillion at the start of the year, has resulted in 2,700 businesses in the construction sector entering into insolvency in the past year.
Luke Morgan, a Partner in Palmers’ Commercial Litigation team, warned that late payments often result in decision-makers having to get creative when it comes to finding new ways to plug gaps in their cash flow.
He added that, in the very worst cases, unpaid invoices can force a once-successful firm to go under if it is unable to find a way to make ends meet.
“Late payments often build up rapidly and can quickly have disastrous consequences if business owners do not act fast to reclaim what is rightfully theirs,” Luke said.
“There is a lot of talk in the media these days about the UK’s worsening late payments crisis, and how the recent introduction of the Small Business Commissioner appears to have done very little to alleviate the problem.”
Luke said that while companies such as FreeAgent are lobbying for a ‘culture change’ to combat the crisis, late payments continue to remain an issue, and businesses need to take action.
“Palmers provides a debt recovery service that is straightforward, effective and can help your business deal with its invoice debts quickly and efficiently,” he said.
“Such services are vital at a time when there appears to be no end in sight for the late payments crisis.”
For more information about how Palmers can help, or to find out more about our Commercial Debt Recovery Scheme, please contact us.