Welcome to this monthly Accounting News bulletin from DG Accountancy Services (http://www.businessbods.co.uk) bringing Small Business' news and information from the business world, as it happens!

Tuesday, 5 August 2008

Large organisations are ‘abusing’ small businesses’ trust by failing to settle invoices quickly, the Federation of Small Businesses (FSB) has claimed.

According to the lobby group, new evidence suggests that smaller firms are being forced to wait for up to 100 days before receiving payment for goods or services.

Delays in payment, along with last-minute changes in terms and conditions, can create significant cash flow difficulties for many businesses.

John Wright, FSB National Chairman, warned that small firms are reluctant to confront large corporate organisations over the issue.

‘Big companies appear to be aware that small businesses are afraid of taking them on over payment terms and are abusing their power as a result,’ he said.

‘At a time when small businesses are finding it difficult to deal with a slowing economy and rising costs, it is shocking that large companies think it is acceptable to use them as an unofficial source of credit.’

Meanwhile, a recent study by the Forum of Private Business reveals that late payment is a growing problem for small and medium-sized enterprises, with almost 82% of respondents reporting an increase in the number of customers that are paying late.

Under the Late Payment of Commercial Debts Act 2002, businesses have a statutory right to charge interest for the late payment of commercial debt, at a rate of 8% above the Bank of England’s reference rate.