28 August 2008 | Jake Kanter
A large majority of small suppliers do not receive payments within the contractually agreed period, according to a report.
A study of 1,500 small companies by the Forum of Private Business (FPB) found 88 per cent were not paid on time by their larger customers. The majority of the respondents, 72 per cent, said their standard billing period is 30 days - the legal maximum before a payment is classified as "late".
Some 56 per cent said late payment had become worse over the past year. Just under a third were owed between £1,001 and £5,000.
Nick Palin, finance and administration director at the FPB, said in a statement: "Supplier abuse appears to be widespread and many smaller firms are in a catch-22 situation, fearing that if they take action and use the legislation to charge interest, these larger companies will simply refuse to deal with them again."
Nearly all of the small firms questioned called on the government to do more to tackle the problem of late payment. In addition, 72 per cent of the vendors suggested the credit crunch is having a serious impact on their businesses.