More small businesses are having to go to court to chase late payments with an average value of £4,619, research has unveiled.
The survey of 27,000 SMEs found that the number of county court judgements (CCJs) brought by small firms increased by almost a quarter (23 per cent) between the first and second halves of 2015.
The research was carried out by Ormsby Street, which provides a credit rating service for its SME customers.
Managing director Martin Campbell said: “Almost £5,000 is a significant amount for any small business to have to go to court to chase, and it is hugely unfair that a small business should have to spend its precious time and resources on chasing payment for work that has already been delivered.
“Late invoice payment is fast becoming the scourge of small business in the UK, causing cash-flow issues that can impact growth and even the very existence of a business.”
The research follows a number of high-profile cases in which companies have delayed payments to suppliers.
Last month, the outcome of an investigation by the Groceries Code Adjudicator found that Tesco had paid suppliers late and made deductions to invoices.
More recently, the Forum of Private Business (FPB) has taken on the world’s largest concrete maker, Aggregate Industries, on behalf of an anonymous small supplier over claims that invoices had gone unpaid for 93 days.
Small firms losing patients
The FPB’s Hall of Shame lists among its poor payers some of the UK’s biggest companies. Research projects manager Thomas Parry reports that patience with large companies delaying payments to SMEs is wearing increasingly thin.
“We found that with the last two firms that we put in our Hall of Shame – Aggregate Industries and Holland & Barrett – people are not prepared to tolerate it anymore.”
Victims of late payers, he said, are more willing to “take a stand”, despite the risk that relationships with clients will be damaged beyond repair.
“We’re about to see a big increase in the cost of doing business with the National Living Wage, so people are really having to focus on making sure that they get paid on time,” Parry added.