Late payments increased by 16%, to 25.7 days, in the final quarter of last year, a situation which had an adverse affect on some recruitment companies.
The amount of recruitment agencies that went into administration increased slightly during quarter 4. In the third quarter of 2010, 9 agencies were put in the hands of the administrators compared to 13 in Q4. However, the Q4 figure was 28% down on the corresponding quarter the previous year.
Large businesses are still the worst offenders when it comes to late settlement, according to the most recent research from Experian. Although these large enterprises have reduced their bad payment performance, they still take an average 35.74 days to settle. Micro-businesses with just 1 or 2 employees tend to be the promptest payers at 20.47 days.
The problem of late payment can have a serious affect on the cashflow of small businesses. Recruiters and limited company contractors should stay vigilant and consider the worst case scenario.
David Grier from MCR, the corporate restructuring and insolvency company, advisers recruiters to think about ways of reducing rent, negotiating with HMRC to defer taxes and offer such reassurance to their bank as may be necessary to ensure that it will continue to make funding available.
Any company that is facing financial difficulties would be well advised to contact their accountant or business advisor immediately. Dealing with these problems straight away will give businesses a better chance of survival.
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