In the firm’s latest banking and finance survey, 23% of members reported an increase in late payments, compared with just 3% who reported a decrease.
Of those surveyed, 12% of which were food and drink manufacturers, 29% have also seen an increase in the average number of days beyond the deadline that a payment is made late, while 8% reported a decrease, and 19% had seen an increase in both elements of late payment.
Phil Orford MBE, chief executive of the Forum of Private Business, said that upwards of £30bn was tied up in late payments.
£30bn in late payments
“Improving cash flow is the likely cause for late payment issues remaining static, despite lengthening payment terms. However, upwards of £30bn remains tied up in late payments, costing a typical small business 130 hours a year to chase and meaning that a third are forced to seek external finance to cover the gaps in cash.”
Orford recommended tackling the issue in a more robust manner, including the reintroduction of compulsory reporting of company payment terms and practices, and annual checks for Prompt Payment Code signatories.
A better promotion of the Prompt Payment Code was backed by 39% of businesses surveyed, with 37% preferring to pay VAT on money that had entered their account rather than when an invoice is submitted and 36% wanted to see persistent late payers barred from government contacts.
Orford said: “It is essential that government uses the recommendations to introduce effective measures and accepts that it not only has a responsibility to play in this area but also that its increased action can also act as an important catalyst for better payment practices.”
Last year, Morrisons came under fire from its suppliers for late payments of invoices.
‘Hall of Shame’
The Forum of Private Business has previously criticised a number of food and drink manufacturers for late payments by adding them to the ‘Hall of Shame’ on its website.
Brewing giant Molson Coors, which owns beer brands such as Carling, Cobra and Grolsch, was named and shamed after it stretched its payment terms to over 90 days.
This meant small businesses working for Molson Coors could expect to wait more than three months before being paid for their goods and services, the Forum of Private Business claimed.
In a letter to its suppliers, Molson Coors blamed the move on the need to invest and said extending payment terms would make the company “more consistent with the industry standard”.
But the Forum argued that bad payment practices among other companies was no excuse for big businesses to squeeze their suppliers.
Retailer Sainsbury was entered into the ‘Hall of Shame’ after it increased payment terms to 75 days and GlaxoSmithKline was given the same treatment for increasing supplier payment times from 60 days to as much as 95, depending on the date invoices are received.