Nearly a third of small businesses are being forced to delay payments to their own suppliers as a result of late payments creating cashflow difficulties for them, perpetuating the late-payment culture in business.
The problem was highlighted in the latest research from Dun & Bradstreet, which also underlined the personal knock-on effect of late payments for business owners, with 15% saying they have used their own savings or assets to cover a shortfall.
Two thirds of SMEs said late payments had the most significant impact on their business of any external factor, with half saying it genuinely put their business at risk of failing. Cash flow problems force around 50,000 businesses a year to fold, according to the Federation of Small Business.
Tim Vine, Head of European Trade Credit Dun & Bradstreet, said: “Late payments are a very real issue for SMEs. Overdue invoices can have a significant impact on cash flow and stifle growth. SMEs are often dependent on larger enterprises, so it can be difficult to simply walk away from a customer just because they are not paying on time."
"The government has made positive moves to tackle the issue in the last 18 months, including the Prompt Payments Code and setting out the intention to improve its own payments performance."
“However, our survey shows that the average payment is increasing so there is clearly more to do to support small businesses in the difficult months ahead.”
If you want to find out more about how to stop cash flow problems through late payments in your business, please get in touch by clicking here or calling 0203 865 9417.