LATE PAYMENTS CAUSE UK SMES TO MISS OUT ON OVER £250 BILLION
August 1st, 2017.


Unpaid invoices and the costs associated with companies pursuing customers’ payments, as well as long payment terms, mean that SMEs in the UK are missing out on over £250 billion of liquid cash flow every year. Integral to the UK economy, SMEs account for 47 per cent of all private sector turnover.


Delayed payments from customers can threaten SMEs’ ability to trade, stifle appetite for growth and recruitment and, in the worst cases, lead to insolvencies. As a consequence, leaving SMEs to cope with the problem is harming the economy as a whole.

Compared to larger companies, SMEs tend to suffer from slow and/or late payments disproportionately due to their position, typically towards the end of the supply chain. Businesses with an annual turnover of under £1 million wait on average 72 days for invoices to be paid. Businesses with an annual turnover of between £1 million and £10 million wait on average 53-54 days. This is significantly longer than the largest businesses, which typically wait 48 days.

One of the reasons behind the slow payment problem is the increasingly commonly demanded 90-day payment terms from large companies, as well as the persistent and growing trend for late payments generally. In 2013, a well-known pharmaceuticals company came under fire for introducing a new 90-day timescale for its suppliers, joining other companies such as iconic supermarkets, drinks companies and IT giants.


For the full story at smallbusiness.co.uk CLICK HERE.