- The survey shows that some of these payments are made up to three months late
- Many more made up to six months after the original payment due date
Large businesses are late payers to SMEs
Research has shown that SMEs are being left to struggle in the face of unpaid invoices or late payments when dealing with larger businesses.
A survey has discovered that more than half of all late payments that are made to smaller businesses are coming from larger businesses, which is leading to fears among business owners that bigger companies are taking advantage of smaller companies that tend to rely heavily on their custom.
The survey shows that some of these payments are made up to three months late, with many more made up to six months after the original payment due date. Many smaller businesses have spoken out in approval of the forthcoming appointment of a new Small Business Commissioner, who will begin work very soon to champion the rights and work of smaller companies. However, most believe that the government can still do more to help small and medium-sized enterprises in the face of these challenges.
It is estimated that the average SME is owed more than £16,000. Industry experts have condemned the complacency of larger companies that can afford to pay invoices much more promptly, pointing out that for some SMEs, the situation is simply not sustainable. It is hoped that the new SME commissioner will take positive steps to improve the situation, so as to ensure that big companies meet their financial commitments to SMEs in a timely manner.
The government has also published figures suggesting that if SMEs were paid on time, around 50,000 companies each year would survive the threat of closure. Business owners are already reporting, and have long reported that the late payment of invoices is a key influencing factor that dictates their ability to survive in the long-term.
For 40% of businesses, problems related to late payments have led to significant difficulties with cash flow, and around 25% have admitted to regular use of overdraft facilities because of late payments.