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Pay problems dominate concerns for small businesses

Cash flow worries as a result of increasing late payments are causing small businesses the most headaches, according to the latest Economic Downturn Panel survey carried out by the Forum of Private Business. 

Some 23 per cent of respondents to the survey selected late payment and, subsequently, poor cash flow as their key issue.

The amounted eclipsed those who voted for a lack of sales – 20 per cent, and complying with health and safety regulations – 11 per cent.

Even declining bank lending was deemed to be less of a concern than poor payments. Banks’ tardy decision making was chosen as the major issue by 6 per cent of respondents, and the steep cost of bank lending by 4 per cent.

In all, 42 per cent of FPB members who took part in the survey reported a deterioration in prompt payments from customers – typically bigger businesses – compared to just 3 per cent who said there had been an improvement.

A total of 56 per cent said there has been no change from previous months.

FPB chief executive Phil Orford said: “Small firms’ cash flow is being decimated by credit restrictions and declining trade.

“Our research suggests that poor payment, which has always been a problem, is now threatening the very survival of many businesses.

“We want the UK’s biggest companies to take the lead and pledge to pay their suppliers on time by signing up to the Code in order to set in motion a consensus of prompt payment through the supply chain.”