Small firms are increasingly resorting to legal means to chase late payments, according to new research, with 23 per cent more county court judgments (CCJs) being brought in the second half of last year than in the first.
According to the study, the average value of a CCJ over the period was £4,619, which as the study’s authors pointed out, is a significant amount for a small business to have to bear as a late payment.
In fact, separate research has found that 14 per cent of the UK’s small and medium-sized enterprises (SMEs) see late payments as their biggest challenge, with almost half waiting for more than 30 days for payments and the average waiting time being just over 40 days.
Meanwhile, for larger SMEs late payments are even more of a burden. Of those with turnovers of between £1m and £5m, 65 per cent wait more than 30 days for payment and, overall, 67 per cent of firms with turnovers of more than £5m experience late payments. This compares with the national average of 47 per cent.
Recently, the Forum of Private Business (FPB) has taken on the case of a small supplier over claims that invoices had gone unpaid for 93 days. The FPB’s Hall of Shame lists some of the UK’s biggest companies amongst its poor payers and a spokesman for the Forum reports that patience with large companies delaying payments to SMEs is wearing increasingly thin.
He added that the victims of late-payers are more willing to “take a stand”, despite the risk that relationships with clients will be damaged beyond repair. As he pointed out, with the new National Living Wage about to come in, the cost of doing business will increase, so people are really having to focus on making sure that they get paid on time.