Builders Come Out on Top According to Company Formation Survey

Last month saw an overall increase in sales revenue for the retail sector. This has been helped in no small part by the fact that Easter fell a week earlier this year. However, while this is positive many small businesses are still struggling with market conditions and late payment.

As we have noted on a number of occasions on this blog, ‘cash flow is king’. Failure to effectively manage cash flow could result in your business going into unnecessary administration. Many economists have commented on the culture of late payment which pervade in Britain.

According to a recent report by finance company AXA, Estate Agents have the worst reputation for paying late, while people who work in a trade such as plumbing and building have the best.

James Burns, enterprise manager at AXA, comments; “The majority of our clients struggle with late payment to some extent. There are a number of things a business can implement to ensure invoices get paid on time, but from my experience the most effective cash flow strategy is making sure you set out clear and definitive payment terms prior to doing business with anybody.”

“Throughout the recession many small businesses have struggled with late payment and the average amount each small business is owed has risen from £2,000 in 2007 to over £8,000 in 2010. The government has attempted to help the situation with its Late Payment Charter, however, it seems to be encouraging the culture of late payment with its ‘Time to Pay’ tax scheme, therefore sending out a conflicting message to the SME sector.”