July 23 2014 Latest news:
By Duncan Brodie
Wednesday, February 27, 2013
MORE small and medium-sized firms in the eastern counties are suffering from cashflow problems compared with a year ago, according to a new survey.
More than one-third (35%) of businesses responding to the latest twice-yearly Business in Britain survey by Lloyds TSB Commercial Finance admitted to suffering cashflow issues, compared with just over a quarter (26%) 12 months ago.
Among the firms experiencing difficulties with cashflow, nearly two-thirds (61%) said that late payments for goods or services supplied were to blame.
Although this figure is slightly down on the 63% recorded in the survey a year ago, late payment remains the largest single cause of cashflow difficulty by a wide margin, with lack of demand the next biggest factor on 36%.
Lloyds TSB Commercial Finance, a provider of asset-based lending and invoice finance, is now urging companies to sign up to the Prompt Payment Code to ease the pressure of late payments on small and medium-sized enterprises (SMEs).
Roger Brown, regional director for Lloyds TSB Commercial Finance, which has itself signed up to the code, said: “There are several things companies can do to ensure that late payments don’t affect their cashflow. Prevention is better than cure, so carrying out background checks on customers and setting out clear payment terms at the beginning of the relationship can help avoid any problems before they begin.
“In addition, widespread adoption of the Prompt Payment Code will mean that companies treat suppliers fairly, and late payments will become less endemic.”
Under the Prompt Payment Code, established by the Institute of Credit Management and endorsed by the Government, signatories commit to pay suppliers on time and to encourage good practice in other businesses.