Late payments growing issue for SMEs

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Late payments growing issue for SMEs

Simon Quicke

Payment times from large companies are slipping to levels that could have a serious impact on smaller suppliers struggling to maintain cash flow.

The warning comes from the Federation of Small Business, which has said in some cases payment has gone past the 100 days point, with the situation declining in the past couple of weeks.

In a statement, John Wright, FSB National Chairman, said that big companies understood that smaller players might be afraid of taking them on.

"Making small businesses wait 105 days for payment and charging them for the privilege of doing so is nothing short of outrageous," he said.

"At a time when small businesses are finding it difficult to deal with a slowing economy and rising costs, it is shocking that large companies think it is acceptable to use them as an unofficial source of credit," he added.

A recent survey by credit reference agency Graydon highlighted late payments as a major issue for the UK channel at present with larger resellers asking for extended payments terms said Mark Ancell, head of intelligence.

"But this problem is not unique to the UK IT channel," he told Microscope, "It is a strategy that larger businesses are asking across many sectors."

Eddie Pacey, European director of credit services at Bell Micro, said the demand for extended payments terms from all businesses was growing at a faster pace.

"Clients will defer payments as it is the cheapest form of funding. Despite the pressures in the current climate businesses need to manage their receivables and cash flow," he said.

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