This is according to a survey of R3's members, which also discovered that late payment has been seen as a major contributing factor towards business insolvency in at least one instance by almost half of insolvency practitioners over the past 12 months.
Some 47% of the survey's respondents cited late payment in at least one case they have handled in the past year, and 59% identified the construction sector as the biggest culprit for non-payment, followed by 5% ranking wholesale and retail as the worst-performing sectors, and 3% blaming the bulk of late payments on manufacturing, hotels and restaurants, and the public sector.
Liz Bingham, president of R3, said:
A fifth of all liquidations in England and Wales in 2012 were in the construction sector, according to R3, and combined with the high prevalence of late payment in company liquidations, this helps to highlight the potential risks posed to an entire industry due to non-payment of amounts owed.
Even if you have not yet encountered any major late payment problems, it is important not to dismiss the risk, as unpaid invoices have a tendency to 'go toxic' and spread along supply chains, particularly where small businesses are concerned.
Ms Bingham says: "The failure of one company can lead to even more unpaid bills and financial problems for others. Late payment is a threat that businesses need to take very seriously indeed."
This is true for companies not only in the construction market, but across the board - remember those 'worst performing' sectors outside of construction included some very general classifications like manufacturing, wholesale and retail, effectively spanning the full distance of the supply chain in a large number of vertical markets.
In practice, the best way to help protect yourself and your industry from toxic shocks due to non-payment is simply to tighten your own credit criteria, at every stage of the process.
Run more thorough background checks before approving large quantities of credit on a client account, or set sensible maximum credit allowances so you can absorb any lost payments that you are unable to recover by chasing the customer through the courts.
Where possible, take swift and stern action on unpaid debts, adding the appropriate interest and fees, to ensure your own cash flow is safeguarded as much as possible - this is not selfish, but makes good business sense.
And as your cash flow remains in a healthier position, you will be able to meet your own outgoings with less difficulty, allowing you to continue to make a valuable contribution to your own supply chain, your wider industry, and to the economy as a whole.
Image "Catastrophic Failure" by flickr user shino 誌野 is licensed under CC BY 2.0