An analysis of how companies are stretching payments to suppliers beyond contractual terms showed that hopsitality venues ‘remain crippled by late payments’, paying invoices 19 days beyond payment terms.
The figure is four days over the national averageand two days ahead of other poor-performing sectors. The data shows businesses have been struggling for longer than a year with no change in figures since before Q3 2012.
"The results don’t paint a good outcome for an already flailing industry," said partner Mark Halstead.
"With 26 pubs a week closing in Britain, it is not difficult to see how being held to ransom by cash flow is causing the sector significant problems. The only positive to take from the data is that the sector, while seriously under pressure, hasn’t succumbed to falling further into distress. Late payments are an endemic problem for SMEs and despite some isolated positives, the overall trend is worsening.
"Without adequate cash flow or access to funding to bridge the cash flow gap, more SMEs will find themselves on a path to insolvency. As the backbone of the UK economy, this situation should be a priority for Government and of equal concern to large corporates who may find themselves without small but potentially crucial suppliers."
The Red Flag Alert data is a baraometer of the health of corporate UK.