Late payments are not only problematic for small businesses but for medium-sized enterprises too, presenting one of the biggest challenges for UK businesses.
94 percent of businesses employing over 50 people reported that late payments cause cashflow problems for them, according to new figures from leading SME funding partner Ultimate Finance.
51 percent of SMEs believe their business would run smoother if they had fewer late payments, and 82 percent of SMEs have had to deal with up to £25,000 in late payments. For medium-sized companies this figure is even bigger, rising to over £30,000 in late payments
Anthony Persse, Director of Strategy at Ultimate Finance commented: “We know that late payments can have a huge impact on small businesses. 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; cashflow and supply chain management affects every organisation, and should be tackled by the community coming together to support one another.”
Whilst the government has recently tried to legislate this area, the impact of this intervention has been questioned by SMEs themselves. In research by BACS, 38 percent of small business owners questioned were unconvinced legislation would be helpful.
Ultimate Finance, which works with thousands of SMEs across the UK, believes that the business community needs to look at the way cashflow challenges affect companies of every size, and create an initiative or code of conduct that supports businesses holistically.