Small firms minister must address late payments

A leading business pressure group is reacting angrily to new figures that show UK SMEs are spending an average of nearly three hours/week chasing unpaid invoices.

A leading business pressure group is reacting angrily to new figures that show UK small to medium-sized enterprises (SMEs) are spending an average of nearly three hours every week chasing unpaid invoices.

The Forum of Private Business (FPB), which has fought hard against the 'malign' culture of late payment, said independent research, commissioned by corporate funding specialists GMAC Commercial Finance (GMAC CF), shows that the UK's four million SMEs spend 11.5 million hours pursuing unpaid invoices every week.

The FPB's Chief Executive Nick Goulding said late payment is still a matter of critical concern, ranking fourth in the FPB's last quarterly survey.

"The Government - particularly the new minister responsible for small firms, Alun Michael - and the Better Payment Practice Group must not ignore these shocking figures," he said.

"They paint a vivid picture of the time smaller businesses waste on bad debtors".

"That is precious time that should be being spent running and growing the business".

"Moreover, late payment reduces cashflow, which is vital for financial health and can be the difference between making or breaking a business".

"Even by the Government's own statistics from the Small Business Service, SMEs are owed a staggering GBP 17 billion from debtors at any one time, and approximately 10,000 UK businesses fail each year as a direct result of late payment".

"The FPB urges all business that suffer from late payment to report the offending bad debtors to the Office of Fair trading and the Department of Trade and Industry." Goulding urged bosses to use the FPB's credit control guide which is designed to help firms combat bad debtors".

""The FPB's credit control guide clearly shows what the law is on late payment - both from Westminster and Europe - and how to use it to enforce payment," he said".

""The guide provides advice on how to avoid falling into the late payment trap, how to monitor and collect debt and what external assistance is available to help businesses recover outstanding payments".

"Furthermore it gives easy to understand advice on how to run an effective credit control system".

"In addition our member services team are only a phone call away".

"" Average number of hours spent chasing unpaid invoices per business by business sector: Business Sector - Manufacturing * Number of SMEs - 33,000.

* Total hours spent chasing unpaid invoices - 148,830h.

* Average hours spent chasing unpaid invoices per business - 4.51h.

* SMEs are defined as businesses with an annual turnover of between GBP 350,000 and GBP 10 million (figures supplied by Continental Research).

The research was conducted by Continental Research on behalf of GMAC CF.

The Forum of Private Business (FPB) has long campaigned to bring an end to late payment practices and was instrumental in getting a Statutory Right to Interest (SRI) on late payments passed into law.

The Late Payment of Commercial Debts (Interest) Act 1998 enables a small business to charge interest at 8 per cent above the existing Base Rate on debts due from large businesses, public sector bodies, and other small businesses.

About the FBP - the Forum of Private Business (FPB) was formed in 1977 and is a pressure group fighting on behalf of private businesses.

The FPB represents approximately 25,000 UK-based businesses employing in excess of 600,000 people, and is a powerful lobbying voice in both the UK and the European Union.

The FPB, as the only full UK member of UEAPME - the organisation that represents small and medium-sized enterprises (SMEs) in Europe - is the most prominent advocate of UK SMEs in Brussels and has a track record of positively affecting legislation prior to its introduction in the UK.

The Forum of Private Business (FPB) has long campaigned to bring an end to late payment practices and was instrumental in getting a Statutory Right to Interest (SRI) on late payments passed into law.

The Late Payment of Commercial Debts (Interest) Act 1998 enables a small business to charge interest at 8% above the existing Base Rate on debts due from large businesses, public sector bodies, and other small businesses.

The FPB also provides a range of business services aimed at increasing member efficiency and profitability.

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