According to recent surveys conducted by Concur and YouGov, late payments have impacted 40% of businesses in the past month. The result of a poll of 1,233 British small- and medium-sized enterprises (SMEs), Concur’s report reveals key issues arising as a direct consequence of clients or suppliers not settling accounts on time.
Calls for protective legislation for SMEs
SMEs are a prominent feature of the commercial landscape in the UK; there are currently more than two million individuals registered as self-employed. Not only that, but an estimated 50% of the UK workforce will be self-employed by 2020, contributing over £51 billion to the economy. As such, a growing number of commentators are calling for legislation to protect them from complications such as late payments.
Emma Maslen, Senior Regional Director for Enterprise at Concur, explains, "As Britain builds its digital future, it’s shocking that so many medium-sized companies are the most heavily affected [by this issue]... This underlines the very real risk this culture poses to the viability of some of the country’s leading employers."
Late payments affecting 40% of small businesses
The study revealed that late invoice payments were the direct catalyst behind organisations being forced to take action to protect cash flow.
40% of companies surveyed highlighted that they had received a delayed remittance in the last month, severely impacting cash flow. The report considered this high volume to be 'worrying' in the context of an estimated 23% of business failures being caused by payment problems.
This trend affects medium-sized enterprises more than their smaller counterparts, with 63% of them receiving late payments, compared to 40% for smaller ones. 32% of medium-sized firms noted that they would feel a ‘significant impact’ if an invoice from their biggest customer or client was late. Of this number, 14% said this would reduce their ability to pay salaries and 13% would have to reduce spend on innovation and other investments.
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