Mounting research highlights damaging impact of late payments
Several studies published in recent days highlight the extremity of the UK’s so-called ‘late payment crisis’, which appears to be pushing an increasing number of small British businesses to the brink.
A report published by the Federation of Small Businesses (FSB) this week estimates that around 50,000 small and medium-sized enterprises (SMEs) are forced to close their doors every single year as a result of their late payment woes.
It reveals that 20 per cent of UK SMEs have suffered ‘significant financial losses’ as a result of unpaid invoices, while 30 per cent have been forced to run into their overdrafts due to late payments.
Meanwhile, a separate study carried out by Crossflow Payments suggests that an increasing number of SMEs are now facing what it describes as a ‘working capital crisis’.
Its report argues that late payments are hindering SMEs’ ability to trade overseas at a time when Brexit is putting Britain’s businesses under more pressure than ever before to explore new growth and export opportunities.
The study estimates that as many as 600,000 UK businesses are now unable to export due to this payment crunch.
After quizzing a number of small business leaders, the report found that almost a quarter (23 per cent) of SMEs now ‘regularly’ receive invoices late.
It also found that more than half (55 per cent) typically have to wait a minimum of ten days beyond their contracted terms before they receive payment or correspondence.