The perennial problem of late payment for small businesses is getting even worse according to two new reports.
According to the Asset Based Finance Association (ABFA), UK businesses with turnovers of under £1 million are now waiting an average of 72 days for payment of invoices, a day more than a year ago.
This means that the smallest businesses are now waiting an average of 11 days longer for payment than they were even at the peak of the recession, according to ABFA. In 2009, businesses with turnovers of under £1 million had to wait an average of 61 days for payment of invoices.
Jeff Longhurst, ABFA chief executive, said: "It's very worrying to see that the trend is going in the wrong direction for smaller businesses. The benefits of the recovery are not being felt equally."
He warned: "Smaller businesses are particularly vulnerable. No matter how successful they are, if just a few invoices aren't paid on time, they could end up in serious financial trouble. Delays to payments put enormous pressure on small businesses' cash flow - they have to meet overheads, tax bills and their own supplier invoices whether they've been paid or not."
After the general election, the Government introduced a new Small Business Conciliation Service to help resolve pay disputes between SMEs and their customers.
Longhurst said: "Whilst we fully support it, it remains to be seen whether the launch of another mechanism for SMEs to report their clients for late payment will have more of an impact on the issue than previous efforts."
He added: "Businesses already have means of redress for late payment, such as the ability to charge interest, but this is a route that many are reluctant to take if they want to get repeat business from clients."
Also this week, a survey of UK micro-businesses and sole traders by YouGov on behalf of FreeAgent has found that 86% of firms said they had been paid late. Almost half (46%) have had to wait two months or more to get paid; while 13% have had to wait a year or more to get paid by a client.
However, the research also found that some small traders are slow to chase up payment. Almost a third (31%) of respondents said they wait for a month or more after their payment deadline has passed before chasing an unpaid invoice; 28% said they would chase an invoice within the first week after it was due.
Ed Molyneux, ceo and co-founder of FreeAgent, said: "We know that it can be awkward to chase clients and ask them for money, but if you don't follow up with late payers from the moment that their invoice is overdue, they may not see the urgency in paying you."