Small business bosses are counting the costs of slow payments. The consequences of customers failing to settle-up on time have been revealed as wide-ranging and can even create a barrier to future funding.
Close Brothers Business Barometer data has revealed around two thirds of SMEs believe that there is a culture of slow payments in the UK. The problem is particularly severe in London (73 per cent), the South West (72 per cent), and Northern Ireland (87 per cent).
It’s claimed business bosses suffer damage to the supply chain and their business reputation as a result of slow payments. In some cases, it can even affect credit ratings and therefore future access to funding.
What is being done to prevent slow payments?
Earlier this month Paul Uppal was appointed as small business commissioner after a two-year wait. He’s tasked with supporting small businesses to resolve disputes with larger businesses to drive a “culture change” in payment practices. 74 per cent of respondents of the Business Barometer survey did not feel that there is suitable legislation to support small businesses. One in four firms have been forced to seek legal advice over slow payments.
Head of Businesscomparison.com Philip Brennan comments:
“Slow payments are damaging far too many of the 5.5 million small businesses in the UK. £26.3 billion is owed to small and medium sized businesses so it’s small wonder that it’s negatively affecting growth. The government published guidance for large businesses to report on how they pay their suppliers earlier this year but more needs to be done. It’s hoped the eventual appointment of a small business commissioner after a two-year wait will stimulate discussion and action. Cash flow is king for SME owners and they can’t afford the time, stress and financial difficulty resulting from slow payments.”