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Prompt payment needed to restart UK economy

Prompt payment is vital to get the UK economy moving, according to the North East Chamber of Commerce (NECC).

Companies that delay payments are damaging the efforts to revive the economy and putting other businesses at risk.

The NECC found that 93% of businesses have suffered from late payments, while more than a third said 30% of transactions were settled outside of the agreed dates.

Large businesses were marked as the most likely to delay payments, while small businesses were more reliable.

The NECC has urged companies to make changes to the way they make payments, after it found over two thirds of business to business transactions are made through cheques, despite only one fifth stating that this was their preferred way of receiving money.

Private sector firms fared the worst in comparison with the public sector, as 60% of private deals were paid late, while 27% of public sector deals were delayed.

NECC Director of Policy, Ross Smith, said: “While the amount of late payment in the public sector is unacceptable, especially with the Government’s commitment to pay all undisputed invoices in 10 days, it is surprising to see such a high share of businesses failing to honour payment terms,”

“It would be fantastic to see the North East lead the way by improving payment timescales. We want to see businesses being paid quickly and fairly for the services they are supplying.”

Although prompt payment discounts are not the norm, 10% of businesses said they offered early payment benefits, with 14% of manufacturing companies offering a discount, and 15% of construction firms.

A kitemark scheme will be introduced from the NECC’s survey, which is part of a larger national study from the British Chambers of Commerce.

The scheme will encourage more timely payments in order to free up cash and kickstart the economy.

This was posted in Bdaily's Members' News section by Miranda Dobson .