| Late Payment |
| New | See the Department of Trade and Industry's response to the issues raised in this survey |  |
| Legislation is currently being debated in Parliament which would allow businesses to claim interest (at 8 per cent over base rates) on invoices paid late. The legislation would be phased in, allowing small enterprises (those with 50 or fewer employees) to claim against large enterprises from September 1998. Two years later, small enterprises would be able to claim against other small enterprises and another two years after that, all enterprises would be able to claim against all others. |
|
In this survey we asked respondents (mostly owners and managing directors of small firms with internet web-sites, but including a few managers of very large firms) their views on the problem of late payment and the proposed legislation. The chart (right) shows that 69 per cent of respondents consider late payment to be a problem for their business. There was no clear relationship between firm size and seriousness of the problem, with the few firms in our sample with over 50 employees reporting just as much of a problem as the smaller firms. |
"Do you consider late payment to be a problem for your business?"
|
|
"When faced with cases of late payment, how often do you think your business would exercise its right to late payment interest?" 
|
Only 19 per cent of firms, however, said that they would always exercise
their right to late payment interest. Almost half of respondents said that
they would exercise their right sometimes (see chart, left).
Only 7 per cent said that they would never charge late payment interest, but one-quarter said that they would rarely exercise their right. One reason often given for reluctance to charge interest is that small firms do not wish to damage the relationship with their clients. One respondent said:
|
|
The chart (right) shows that the smallest firms appear rather more
reluctant to use the proposed legislation than larger firms.
Over 40 per cent of firms with fewer than 5 employees would exercise their right to late payment interest only rarely or never, compared with only half as many of the larger firms. Almost one-quarter of firms with no employees (i.e. just the owner or partners work alone) say that they would never charge late payment interest. |
Proportion of firms considering that they would exercise their right to late payment interest rarely or never - by firm size 
|
|
"Has your business made any plans for the charging and/or payment of late payment interest?" 
|
Only one-quarter of small firms report having made any plans for the
charging and/or payment of late payment interest. This proportion was not
closely related to firm size.
|
|
Slightly more firms, 26 per cent, say that they would consider using a
factoring or debt collection company to handle late payment interest
for them.
Over one third of firms with between 5 and 49 employees would consider such a service, compared with 23 per cent of firms with fewer than 5 employees.
|
"
Would you consider using a factoring or debt collection company to handle late payment interest for you?" 
|
However, others have serious doubts about the how the legislation would work:
| See the Department of Trade and Industry's response to some of these comments | |
|
After three surveys when growth was fairly constant,
the internet-connected firms taking part in this
survey report a modest pick-up in the UK economy over the past month. Some 61 per cent of the firms said that their sales were higher in February 1998 than in February 1997, while only 17 per cent said that they were lower. The resulting balance (the proportion saying higher minus the proportion saying lower) of +44 per cent is considerably higher than last month (+37 per cent). |
"Was your sales turnover
in the month just ended higher, about the
same, or lower than in the same month last year?"
Note: Chart shows percentage balances (percentage saying higher minus percentage saying lower). Earlier surveys include late responses and so may differ from figures published elsewhere.
|
"Were your average selling prices
in the month just ended higher, about the
same, or lower than in the same month last year?"
Note: Chart shows percentage balances (percentage saying higher minus percentage saying lower). Earlier surveys include late responses and so may differ from figures published elsewhere.
|
Although in the last survey a record number of firms reported an increase
in prices, this does not appear to have been the beginning of a trend.
In this survey, one-third of respondents reported that their selling prices were higher in February 1998 than in February 1997, while 11 per cent said that their prices were lower. The balance of +23 per cent reporting higher prices compares with +32 per cent last month. |
Questionnaires are sent out and returned by e-mail each month. If you would like an e-mail to notify you each month when the latest e-survey is published, then please send an e-mail to esurvey@mccannics.co.uk with the subject SUBSCRIBE.
This eighth survey questionnaire was sent out on 1st March 1998 and by 11th March responses had been received from 84 businesses across the UK.
As well as covering issues of topical interest, the e-survey aims to provide an indicator of prevailing business conditions, well in advance of official statistics and traditional postal surveys, and it has already found a place in the Bank of England’s Quarterly Small Business Report. Increasing its value depends on it recruiting more volunteer UK businesses, willing to complete a very short e-mail questionnaire each month. Owners or managers of businesses in the UK which would like to take part in the survey should send a blank e-mail to: volunteer@mccannics.demon.co.uk
All individual replies will be kept strictly confidential. Only anonymised results will be published, and your e-mail address will not be passed on to any third party.
E-mail us with comments, queries or suggestions for future topical questions at: esurvey@mccannics.co.uk
| McCannics Home Page |
e-survey: | DTI Response |
Comments | Questionnaire | Download Tables |
Past surveys |
