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Late payments still the norm in hospitality, threatening SMEs

28 November 2013 by
Late payments still the norm in hospitality, threatening SMEs

Hospitality suppliers and businesses are still showing signs of economic distress despite indications that the UK economy has left the recession behind.

Red Flag Alert said that the findings showed that economic stability for both hospitality providers, and their suppliers, may still be shaky.

Late payments can create "pain points" leading to a knock-on effect that can threaten the economic stability of small businesses (SMEs), especially among smaller suppliers to larger firms. Although the figure has improved from 16 days in Q2 this year, overall, the company said that the trend was worsening.

Partner at Red Flag Alert Mark Halstead said: "These figures show that hotels, guest houses and B&Bs have all been facing continued pressure since 2012. 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 cashflow 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."

Red Flag Alert's most recent research has shown a decrease in UK businesses facing critical economic hardship but a rise in those facing problems.

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