Late payments are causing cashflow issues for an overwhelming 81 per cent of small and medium-sized enterprises (SMEs), a report has revealed.
Ultimate Finance, which published the research, found that 82 per cent of small businesses have up to £25,000 in late payments each year.
This rises to more than £30,000 for medium-sized companies (50 or more employees).
With “late payment” culture becoming increasingly more common, the study looked at how late payments affect individual businesses.
Unsurprisingly, more than half (51 per cent) of SME owners said their business would run smoother if they had fewer late payments.
Anthony Persse, director of strategy at Ultimate Finance, said: “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.”
Earlier this year, it was revealed that late payments factor into one in five insolvencies, with SMEs waiting on average 72 days to receive payments.
Andrew Tate, president at R3, the insolvency body, said: “A business can have a great product and great staff, but if it doesn’t get paid for what it sells, or if it is over-reliant on one supplier or customer, things can go wrong very quickly.”