Late payments are an issue for more than half (53%) of Britain’s small and medium-sized businesses (SMEs), according to Zurich’s latest SME Risk Index.
The total owed to British SMEs by their customers currently amounts to over £225bn, with one in five (20%) owed more than £25,000, one in ten (8%) £100,000 or more, while 1% are waiting for upwards of £1m.
A threat to business
Late payments are causing serious problems for many SMEs, with 41% experiencing significant cash flow problems as a result.
Even more worryingly, two thirds of SMEs (67%) agree that issues with late payments are leading to some SMEs being forced to close.
“£225bn owed in late payments to British SMEs is an enormous sum,” says Jason Eatock, Head of SME at Zurich. “It is no surprise that many have experienced cash flow problems as a result.
“We have been warned about a ‘cocktail of threats’ to the economy, and small businesses will need all the capital at their disposal to weather a potential storm.”
Calls for action
Late payments are a longstanding issue for British businesses, but governments have yet to take decisive action.
This may explain why only a quarter (28%) of SMEs feel that the Government is doing all it can to tackle the issue, compared with half (49%) saying more support is needed for businesses affected by late payments.
Visit Prompt Payer for details of how you can reduce the time it takes for you to get paid.
By Prompt Payer