A new report has revealed that businesses are being paid at least one month later than agreed, and company directors are taking salary cuts to mitigate the impact.
One in five directors has been forced to take a salary cut to avoid their firm going out of business due to late payments.
Tracy Ewen, managing director of IGF Invoice Finance, comments on the news:
“The enforced wage cut taken by one in five directors is a worrying development that shows how delayed payments are bringing many small businesses close to failure. This latest news provides further evidence that urgent action is needed to force improvements among late payers. If the Prompt Payments Code isn’t working, then perhaps more stringent legislation is necessary.”
Tracy continues: “However, until this happens, there are funding measures firms can take to cover breaks in their cashflow without resorting to slashing salaries. Consequently it is important that firms thoroughly review their options and make use of any free financial advice that their own financial partners and suppliers can offer before pressure from large customers impacts their growth or operations.”