According to a survey by Dun & Bradstreet, over the past 12 months SMEs were owed an average of £80,141 in late payments. That’s almost 25% higher than in 2017. The survey also highlighted the knock-on effects for small businesses across the country, which serve as a timely reminder to tighten up cash flow protection.
The bottom line
The report also explored the financial impact these late payments have on UK SMEs. 48% of businesses surveyed said that overdue payments were putting their business at risk. A closer look at the repercussions of late payments revealed a range of business difficulties caused by these delays.
Many respondents reported that they had suffered cash flow difficulties (31%), and nearly as many were forced to stop supplying to late payers (25%). Perhaps the most concerning consequence, though, was delaying payments to their own suppliers (28%), which reveals how late payments can become a cyclical problem.
As well as harming company finances, late payments also make it harder for SMEs to grow their business effectively. Separate research by Liberis found that businesses are spending an average of three days a month chasing unpaid invoices. This is time that could be spent addressing other growth factors.
In particular, recruiting and retaining the right talent is flagged as a problem for small businesses. An Aldermore Future Attitudes study found that two-thirds of UK SMEs were struggling to find and keep good staff.
What can be done?
62% of respondents to the Dun & Bradstreet survey believe that the government needs to improve legislation to prevent late payments, and 63% believe late payers should face financial penalties.
However, businesses can also make changes in a more immediate, direct way. Take the time to update your invoicing terms to ensure that you can charge statutory interest on late payments, and pursue legal action in the event of non-payment. You can also balance this by offering discounts to prompt payers, or making it easier to pay online.
If you need assistance recouping unpaid debts in a sensitive and timely manner, contact Dukes Bailiffs today.