May 18 2012.

The late payment of trade invoices is threatening the profits, growth and even survival prospects of small firms, but few use formal procedures to tackle the problem. This is according to findings of a research report launched today by the commercial credit referencing agency Graydon UK, working in partnership with the Forum of Private Business (FPB).

The survey, which canvassed the views of 500 UK small businesses, reveals that 51 per cent of companies cite that the late payment of trade invoices is a problem. Twenty-three per cent of these companies subsequently indicated that late payment is a serious problem, with 16 per cent saying they have almost been put out of business as a result.

Further, 45 per cent reported that late payment has eroded their profits and 23 per cent asserted that it has undermined their ability to invest in growth through innovation.

The research also shows that businesses which embrace credit control procedures of some form are significantly less likely to suffer as a result of late payment. Less than half (44 per cent), however, employ formal credit control procedures, with 38 per cent instead relying on a mix of formal and informal processes and 16 per cent juggling payments on an ad-hoc basis.

Phil Orford, Chief Executive of the Forum of Private Business, said: "The research shows just how damaging the late payment of invoices is for small firms across every sector. It decimates cash flow, kills growth and innovation and ultimately forces businesses to the wall. We need to educate business owners about exactly what they can do proactively to minimise late payment."