Late payment is the biggest concern facing small businesses in the UK, according to a new report.
Half of all small and medium-sized businesses said they found it difficult to get paid by the customers within their payment terms, according to the research by the Asset Based Finance Association (ABFA).
A further 44% said they had experienced customers asking for extended credit in the last six months.
“Cashflow problems, caused by limited working capital and poor credit management, are a major contributing factor to corporate failure in this country,” said Kate Sharp, chief executive of the ABFA.
The research also revealed that 48% of small business owners thought interest rate increases in 2007 have had a detrimental affect on their business. This figure increased to 57% for companies turning over less than £100,000 and for those in the manufacturing industry.
However, despite the concerns over late payment and interest rate increases, 40% of respondents claimed the financial health of their business was robust, and 55% expect higher turnover in 2008.
The survey also found that private capital was currently the most popular option for business owners looking to grow their company.
Sharp added: “The relentless interest rate hikes this year appear to have put SMEs off traditional finance and so they are turning to less reliable options, such as private capital, to fund growth.”
Sharp said education about the different types of finance available was a necessity for small firms.
© Crimson Business Ltd. 2007
