Businesses advised to utilise credit insurance as protracted payments remain an issue
Late payments remain the main cause of cashflow problems for UK businesses, a recent Lloyds TSB survey has revealed.
The bank’s biannual ‘Business in Britain’, which covers the first half of 2011, polled over 1,800 firms with turnovers ranging from less than £1 million to £100 million plus.
Of the 32 per cent of firms nationally which revealed they were experiencing cashflow problems, the majority (63 per cent) cited late payments as the main cause.
Pressure on companies’ overdraft facilities and fall in demand / lack of business were also key causes of cashflow concerns, comprising 37 and 38 per cent of responses respectively.
Regionally, the East Midlands and the East of England are most affected by late payments, with 69 and 68 per cent of businesses blaming late payments for cashflow problems.
Companies in the communications, transport and construction industries are most likely to be affected by late payments (86, 72 and 70 per cent respectively).Firms operating in the hospitality and leisure industry were least likely to cite late payments as a cause of cash flow problems (38 per cent).
Martin Walmsley, head of debtor insurance at Lloyds TSB Commercial Finance, said: “The number of businesses citing late payments as the main cause of cashflow problems has increased marginally by three per cent since the second half of 2010.
“Even though this is only a slight increase, businesses should still be implementing stringent credit control functions to avoid liquidity being affected by late payments.
“Our debtor insurance policy covers up to 90 per cent of bad debt suffered as a result of delayed payments and safeguards businesses ’ cashflow, enabling them to put in place long-term growth plans.”