Member Article

Late payments cause pessimism amongst London businesses

The problem of late or slow payments continues to cause cashflow difficulties for businesses in London, as over a third expecting it to get worse in the next six months, according to recent research.

The latest in the Business in Britain series of reports from Lloyds Bank has found that, although overall business confidence remains strong, at 40 per cent, many businesses are reluctant to invest in growth, hampered by the fact that 22 per cent of businesses in the capital admit to experiencing cashflow problems.

The report shows late payment is cited by over half (55 per cent) of those businesses as being a major cause.

The twice-yearly Business in Britain report, which is now in its 23rd year, canvasses the opinions of 1,500 UK companies, predominantly small and medium-sized businesses, and shows that 37 per cent of London enterprises expect the proportion of customers requiring deferred payment terms to increase in the next six months, up from 29 per cent six months ago.

Just five per cent of businesses in the capital expect that proportion to fall during the second half of 2015.

Donald Kerr, Managing Director at Lloyds Bank Global Transaction Banking, which provides alternative sources of financing for customers including asset based lending and trade finance, said: “While the number of businesses suffering cashflow problems has fallen from a peak of 35 per cent in 2013, it remains stubbornly high.

“Cashflow is the lifeblood of any business but for too many businesses, late payments continue to be a significant problem. Where businesses do expect cashflow to be an issue, they need to take action to manage issues like late payment so that it doesn’t hamper their opportunities to grow.

“Specialist types of lending such as invoice finance can alleviate these pressures by allowing businesses to borrow against the value of their invoices helping them to avoid payment delays and improve cashflow.

“Thorough credit checks on customers and setting out clear payment terms at the outset of any relationship will also help.”

This was posted in Bdaily's Members' News section by Ellen Forster .