More businesses suffer from late bill payments (From The Northern Echo)

More businesses suffer from late bill payments

8:31am Saturday 4th September 2010 in

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AN increasing number of North-East businesses face insolvency because they are not being paid on time, an independently- commissioned survey has found.

Almost three-quarters of the region’s companies suffer from late payment, with 43 per cent stating they are now more likely to accept excuses from late-paying customers than before the recession hit.

Perhaps even more worrying is that 14 per cent would avoid chasing debts because they are worried about losing business.

The problem is not restricted to the private sector as small businesses continue to be paid late by the Government and its agencies, despite a pledge more than a year ago to pay bills promptly.

The CBI has urged businesses to implement robust accounting procedures to ensure they are in a position to settle their debts.

Sarah Green, CBI director of the North East said: “This situation concerns us greatly because cashflow is the most important thing for keeping a business solvent. Clearly there is pressure in the system that is cascading to create the situation where businesses are struggling to pay their bills.

“Any well-run company must ensure they implement a transparent audit trail so they are in a position to pay their bills on time. Burying your head in the sand is not an option.”

Mark Gardner, an insolvency specialist at Latimer Hinks solicitors warned businesses must take action rather than rely on banks to bail them out of a cashflow crisis.

He said: “Businesses need to realise that the economic world has changed and that merely asking a bank to lend them money to keep the business going is no longer appropriate.

“The reality is that banks will be cautious for the foreseeable future.

“Firms need to ensure that bad debts are chased and collected, credit application forms are completed and references taken up and potential customers are assessed as to their ability to pay.

“Businesses need to put together a much more detailed, sophisticated and considered case to secure finance in this current troubled economic climate.”