A quarter of working time is spent chasing late payers by ten percent of businesses in the South East, according to recent data. Bibby Financial Services carried out research that revealed that one in ten Small and Medium Enterprises in the South East region spend one week in every four chasing late payments. Valuable resources are being redirected from other areas of business to collect late payments. In March 2010, the figure was six percent, with the average UK figure standing at nine percent.
Chasing late payments is believed to cost the UK economy £4.4 billion each year, losing a number of working days in the pursuit of payment. As small businesses in the area have already been affected by public spending cuts and job losses in the public sector, the figures will no doubt cause concern.
The government has been looking at a new European Directive, which will reduce payment terms to 30 days, resulting in businesses getting their payments in a shorter period of time. A spokesman for Bibby Financial Services, Jon Charsley said that the data was a concern as businesses had to spend more time chasing payments, taking valuable time away from building their businesses. He said:
“The introduction of the EU directive would be a welcome move to tackle the late payment issue and would provide more leverage to business owners in demanding payment for their hard work, which in turn will enable better control over their cash flow.”
Small business owners are reluctant to damage relations with customers and don’t have the necessary resources to implement legislative procedures.
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