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Small consultants firms wait 76 days for payment

Research by the Association for Consultancy and Engineering (ACE) has revealed that small consultants have an average wait of 76 days for their invoices to be paid.

The ACE’s Benchmarking Lite survey of 36 firms with fewer than 50 staff revealed that for 20% of small firms the wait was more than 100 days. The wait is less for larger firms who typically have an 85 day wait for payment, but the wait is significantly longer than the government’s stated desire to see bills paid within ten days.

The ACE said that with 17% of firms running at a loss, and margins falling across the sector, the long repayment times can have significant problems for small companies with limited reserves.

“With increasing financial pressures facing client companies in the public and private sectors, small engineering companies are facing significant waits to be paid for the vital work that they do,” said ACE chief executive Nelson Ogunshakin, adding that he appreciated the government’s commitment on the issue through measures such as the Fair Payment Charter which sets out a maximum 28 days on payment.

Readers' comments (3)

  • Some of us have to wait for over 12 months and the Small Claims Courts are of no use. Even when we obtained a County Court Order against one non-paying Client he was granted an Appeal against this which means a further delay of many months.

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  • Barry Walton

    Can the ACE not put together something like a class action suit in bancruptcy instead of individaul small playerstrying to get paid via routine channels. Won't pay = can't pay = insolvent. That might get some clients' attention.

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  • As a small consultant we have exactly the same experience and late payment puts a tremendous amount of pressure on cash flow. However, I do believe that there is light on the horizon. I am a member of the Cabinet Offices SME Panel which advises Government on barriers to SME participation in Central Government Contracts.

    Although a little slow, things are changing. Artificial barriers such as excessive insurance or turnover requirements during PQQ / tender are being challenged and removed through the Cabinet Office's Mystery Shopper procedure. The presumption that SMEs represent a risk is also being gradually dismantled and procurement officers are being encouraged to consider means to make PQQs and tenders SME friendly. A strategy is also being developed to facilitate the acceptance of consortia in which a number of SMEs can band together to challenge large companies. The culmination of this work is that SMEs and consortia of SMEs will work directly with Government rather than acting as sub-contractors to large organisations.this would in some part rid us of payment problems from sluggish Primes. As a specialist civil engineering consultant this process is already influencing our business model

    If you are still sceptical; SME Redfern Travel was recently awarded a £1.1bn Contract to provide the UK Government Travel needs (http://www.telegraph.co.uk/finance/yourbusiness/8897336/Whitehalls-1.1bn-UK-travel-needs-handed-to-small-business.html). .

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