Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner. Facebook Messenger An icon of the facebook messenger app logo. Facebook An icon of a facebook f logo. Facebook Messenger An icon of the Twitter app logo. LinkedIn An icon of the LinkedIn logo. WhatsApp Messenger An icon of the Whatsapp messenger app logo. Email An icon of an mail envelope. Copy link A decentered black square over a white square.

Companies urged to speed up their payments

Late paying firms cause grief for other businesses
Late paying firms cause grief for other businesses

Small and medium-sized enterprises (SMEs) are being squeezed by other companies failing to pay their invoices on time, according to the Institute of Directors (IoD).

Two-thirds (66%) of SME members of the IoD have had issues with getting timely payment of an invoice, with damaging knock-on effects on their plans for growth and managing their finances.

Late payment by one business pushes the problem down the supply chain, potentially affecting many more firms.

In a survey carried out between November 24 and December 8, 925 members of the IoD with fewer than 250 employees were asked about their experience of late payment.

Of the 615 which had experienced problems, nearly half (47%) said the main reason for late payment was excessive red tape or overly complex terms and conditions.

One in eight (12%) said payment had been delayed because the company being invoiced had changed the terms.

Only 5% said the reason for late payment was a dispute over the invoice.

Half of SMEs who had issues with late payment said it had forced them to change business decisions.

More than one in 10 (13%) were unable to grow their business as planned because of problems getting invoices paid, while 10% said they had been forced to rearrange their financing arrangements.

In excess of a quarter (28%) said they had been compelled to delay payment to their own suppliers, showing that one failure can affect the whole supply chain.

The IoD sits on the advisory board of the Prompt Payment Code, a UK Government initiative to tackle the problem of late payment.

Signatories to the code, including companies like Admiral insurance, Vodafone and Tesco, commit to paying suppliers on time, and deal with disputes fairly.

The code now has more than 1,700 companies signed up, but the IoD survey shows the problem is still widespread.

James Sproule, Chief Economist at the IoD and member of the Prompt Payment Code advisory board, said: “Business is all about negotiation and both sides of a deal want to get the most favourable terms, but when big companies deliberately delay payment it has serious consequences.

“Small and medium-sized businesses employ over 14million people in the UK, making up half of the economy, so it’s very worrying that late payment is a problem for so many.

“We urge those businesses who are pushing their suppliers too far to realise that the stability of an entire supply chain can be undermined by one firm failing to pay on time.

“The IoD will continue to work with government to push companies to sign up to the Prompt Payment Code, because it is simply not acceptable for late payment to be standard practice for many firms.

“If large businesses do not rethink their approach, the pressure for further political intervention, enforcing maximum payment terms or fines for late payment, will only increase.”