SMEs say large corporate organisations are most likely to make late payments, closely followed by the public sector
The late payment problem continues to be an issue for a third of UK SMEs, with as many as a fifth of firms claiming that it is worse now than it was 12 months ago.
A further 65% of those negatively affected by late payments say the situation hasn’t improved in the last year.
The findings come from the latest Close Brothers Business Barometer, a quarterly survey that canvasses the opinion of SME owners and managers from a range of sectors across the UK.
CEO of Close Brothers Invoice Finance, David Thomson, said: “Our findings show that the burden of late payments continues to be a headache for over a third of small businesses, resulting in cash flow difficulties for the majority (65%) and for as many as 15% of firms, it is threatening their ability to trade.”
Of those affected by late payments, over half claim that they have had to write off up to 10% of their turnover on average in the last 12 months whilst almost a quarter have had to write off between 10% and 25% of their turnover.
Mr Thomson continued: “The amount of money that SMEs are forced to write off as a result of late payments is staggering and surely hindering business growth. We found that large corporate organisations were judged the worst offenders by 43% of SMEs, closely followed by the public sector for a quarter of firms.
“We have recently welcomed new rules from the Cabinet Office which aim to reduce late payments by the public sector by enforcing 30 day payment terms which should help to improve the situation somewhat.
“It’s clear that late payments continue to be a real issue for SMEs, that is why we are working to improve awareness of the financial options available, such as invoice finance, that can help businesses manage their cash flow and ultimately enable them to fulfil their growth potential.”
