Late payments represent a huge challenge for medium-sized companies with 94% of them reporting that the issue is causing them cash flow problems, according to a new report.
The business finance provider Ultimate Finance conducted research in partnership with BDRC Continental into the impact of late payments in the SME sector.
The survey’s findings included:
• overall, 81% of SMEs stated that late payments are an issue for them
• 51% of SMEs believed their business would run smoother if they had fewer late payments
• 82% of SMEs have up to £25,000 in late payments
• this rises for medium-sized companies (more than 50 employees) which have an average of over £30,000 in late payments.
The main political parties have vowed to stamp out the problems of late payments by introducing legislation such as late-payment reporting.
However, Ultimate Finance said that this sort of legislation can be incredibly divisive, with the lender recognising that businesses of all sizes have their own cash flow issues.
The company is instead calling on the business community to come together and find its own solution to late payments.
“We know that late payments can have a huge impact on small businesses,” said Anthony Persse, director of strategy at Ultimate Finance.
“It is without a doubt, one of the biggest challenges faced by UK companies.
“However, there is a deep misconception that it is an exclusively small business issue, which is simply untrue.
“This is leading to rules such as late-payment reporting, which is creating an ‘us and them’ situation, when we should be seeking a workable long-term solution.
“This is not just a case of the bigger boys picking on the smaller guys; cash flow and supply chain management affects every organisation, and should be tackled by the community coming together to support one another.
“Many SMEs have significant late-payment debt and it’s clear that something must be done.”