ONE in 10 businesses in the South East is spending more than a quarter of its time chasing outstanding payments, figures reveal.
This is taking away valuable resource needed to run the company, according to the latest research by specialist invoice finance provider Bibby Financial Services.
The survey of small to medium-sized enterprises in the region has revealed that 10 per cent are now spending more than a week a month chasing customers for payment – a figure which has risen from six per cent in March 2010, and is just above the national average of nine per cent.
Chasing customer late payments is responsible for losing UK businesses countless working days and it is thought this could be costing the economy £4.4billion every year. The results will be of concern to businesses in the region which have already been hit hard this year with the cuts in public spending and loss of public sector jobs having an impact on the local economy.
The research was carried out as the Government considers implementing a new European Directive next year which sets the standard payment term at 30 days and is designed to reduce the length of time businesses have to wait for payment.
Jon Charsley, spokesman for Bibby Financial Services in the South East, said: “It is a real concern to see so many businesses in this region – a vital component in the engine of the economy – having to spend longer chasing payments than last year, which is time that could be better spent building their businesses.
“Our research also shows that 42 per cent of business owners in the South East believe their firms are doing worse than a year ago, with factors such as the turmoil in the eurozone and increasing VAT which appears to be hampering business performance in the region.
“The introduction of the EU directive would be a welcome move to tackle the late payment issue and would provide more leverage to businesses owners in demanding payment for their hard work, which in turn will enable better control over their cash flow.
“However, in a competitive and challenging environment many business owners are reluctant to jeopardise existing relationships with customers or risk losing business by exercising their rights to charge interest on overdue payments, particularly during these tough trading times.
“In addition, smaller businesses just do not have the time or resources to keep chasing late payers let alone go down the legislative route to recoup payments.”