Over half of SMEs in the UK are owed a totalled estimate of £44.5 billion due to late payments – a near one in ten are owed over £100,000 according to results from Zurich’s SME Risk Index.
The research found that, of those who have dealt with late payments, two thirds have experienced delays of over a month which are also 30 days overdue. Just under half feel the damage spread over 3 months while one in ten can wait up to 6 months.
Almost two in five businesses have confirmed that late payments have caused severe issues, impacting their cash flow, a quarter have revealed that their business has fallen into their overdraft. Some small to medium-sized businesses are suffering with late payments so much that they are having to shut up shop because they cannot afford to continue trading.
Head of SME Proposition at Zurich, Paul Tombs talks;
“£44 billion owed in late payments to British SMEs is an enormous sum. It is no surprise that many have experienced cash flow problems or have been forced to enter their overdrafts as a result.
“On an individual basis, many small businesses are owed hundreds of thousands of pounds. In an environment where cashflow is key to small business survival, the situation is simply unsustainable. It is imperative that SME owners receive the support and guidance required and fair access to the funds that they are owed to secure the future of their businesses.”
Head of Business Finance at Businesscomparison.com Laura Thomas comments;
“It is unacceptable that late payments are impacting SMEs ability to manage their business. By restricting cash flow can mean SMEs are unable to take advantage of opportunities and put them under unnecessary financial pressure.
I am interested to see what progress is being made by the Government backed prompt Payment Code (PPC), which launched in 2015. PPC which was introduced to set out best practices for businesses to follow when dealing with suppliers. Driving this culture of better payment practices should result in SMEs not having to wait an unreasonably long time to receive payments, which would relieve the strain and burden half of SMEs currently feel”
If your business is struggling to stay afloat and you are doing all you can to avoid closing the door, then why not look at your options? Businesscomparison.com offers a free financial comparison service helping you get to where you need to be.