A fifth of company insolvency arises from late payment

Published on April 11, 2014 by Crawfords Accounting

Company insolvency is caused by late payments in a fifth of all cases, according to figures from R3, the Association of Business Recovery Professionals.

In 20% of cases, late payment is cited as either the primary cause of company insolvency, or as a major contributing factor.

R3 president Liz Bingham says: “Late payment is a threat that businesses need to take very seriously indeed.

“The late payment problem can have significant knock-on effects within the economy too. The failure of one company can lead to even more unpaid bills and financial problems for others.”

In a survey of its members, R3 found that almost half – 47% – had dealt with at least one company insolvency in the past year where late payment was a major factor.

The construction industry is among the worst offenders, with 59% of corporate insolvency practitioners saying it has the worst track record on payment promptness.

In 2012, a fifth of all company liquidations in England and Wales were in the construction sector, highlighting the risks posed by late payments here.

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