the business ladder

Small businesses have been shown more likely to suffer from issues of cash flow, after a survey revealed that 75% of them are more willing to allow late payments from customers and clients when an excuse is given.

Gathering data from 260 businesses, the debt recovery business Positive Collections looked across a variety of industries.

The survey went on to state  that small and medium sized businesses are more likely to suffer from this issue, with 10% of the companies failing to chase debts up in fear of losing continued business, or simply out of embarrassment. 45 % of businesses with fewer than nine employees (micro businesses) claim they rarely get paid late, so do not share these same worries. Legal action as a remedy to the payment issue was avoided as an idea, with 17 % of businesses saying they would chase the payments, but not take it as far as to court, as the costs could prove too much.

Many small scale companies, experiencing little motivation to pressure customers who pay late in case they are lost, are being further affected by the economic downturn. The credit crises has meant that many of these struggling businesses have had to consent to lengthy credit payment conditions given to them by larger suppliers. 

Furthermore, small businesses are spending more time organising overdue payments, rather than concentrating on keeping profitable and putting priority on gaining more potential customers.

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