Research carried out by local accountancy firm DJH Accountants Ltd reveals that nearly a third of local businesses have witnessed an increase in late payment and DJH is warning that in today's economic crisis this phenomenon poses a potentially critical risk to business.

Chris Beardmore, Director of accountancy firm DJH Accountants, says the findings of the research from their latest customer survey of businesses across Staffordshire and Shropshire, which looked at the experience of local businesses, is reflected in the reality of DJH's work on a day to day basis.

"Cash flow is always the key to business survival and this late payment squeeze is being compounded by the tightening of available bank funding and a lack of payment flexibility from suppliers who are also feeling the pressure.  This is not just happening locally and statistics show that nationally as well as locally businesses with more than 500 employees remain the worst at paying up. Average time beyond agreed credit terms is 35.31 days," says Chris.  "A squeeze on all fronts can then become a crush and as accountants we have seen this definite trend emerging in the early part of the recession and still continuing. 

"But there is help out there for companies who access it quickly before a niggling problem becomes a fatal one.  But when you're preoccupied with the day-to-day running of a business it can be difficult to find time to sift through information and decide which steps to take and when.

"Many businesses fail to reclaim money which is owed to them and don't take advantage of measures specifically designed to ease their cash flow. Sound professional advice provides appropriate pointers in the right direction and makes a real difference when it comes to getting the most from tax breaks and payment strategies," he says.

There is lots of help available to SMEs and it is important that businesses ensure they make use of the help schemes available. Help schemes, the Business Payment Support Service, which has assisted more than a million businesses since November 2008 by agreeing affordable arrangements for the payment of corporation tax, national insurance and VAT; government-funded trade credit insurance top-ups and reclaiming VAT on unpaid sales invoices are just a few of the ways businesses can help with their cash flow but it is important to review options as some of these schemes may be withdrawn in the current round of government cuts.