Late payments put region’s businesses under pressure
NEARLY a third of Yorkshire SMEs reported suffering from cash flow problems in the second half of 2010 with more than half citing late payments as the main cause.
Research from Lloyds TSB’s Business in Britain survey reveals that 63% of firms questioned in Yorkshire blamed delayed payments for putting pressure on their cash flow.
This is slightly higher than the national trend, with 60% of businesses across the UK holding late payments culpable for lack of available capital to invest in growth strategies.
The survey polled 1,800 firms, the majority of which have a turnover of less than £15m.
Lloyds TSB Commercial Finance said that the number of companies affected by late payments is likely to rise as many firms face a difficult financial start to the year, particularly in light of the VAT increase.
Nick Robson, regional director for Lloyds TSB Commercial Finance in Yorkshire, said “Late payments impacting negatively on a firm’s cash flow is a persistent problem for businesses and, with economic growth expected to slow down in the first half of 2011, it is essential that companies keep a tight control over credit terms.
“Against this economic outlook, we expect to see products such as invoice finance, which have established themselves as mainstream financial instruments, continue to be widely utilised this year.”
“Since this form of finance is directly linked to issued invoices, this ensures that if a firm raises its prices to account for mounting taxes and inflation, the amount of funding available to invest in growth and development will also increase,” he added.
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