According to research by Close Brothers, late payments are causing issues for two fifths of SMEs, with the problem increasing in summer and winter.
The research has revealed that the delayed settlement of customer invoices is causing problems for two fifths of SMEs, and having a significant impact on those affected. Of businesses that said they were affected by late payments, two thirds said that it made cash flow difficult to manage. Others said that it significantly impacted their ability to trade and that they spent time chasing payments.
David Thomson, CEO Close Brothers Invoice Finance, commented:
“It is concerning to hear that two fifths of small and medium enterprises have a problem with late payments. Unpaid and delayed invoices can have a detrimental impact on business’ working capital and prevent them from achieving their goals or, worse, continuing business-as-usual trading.”
Question: What impact do late payments have on your business?
| Total | |
|---|---|
| Impact our ability to trade | 29.6% |
| Make cash flow difficult to manage | 65.2% |
| Spend time chasing payments | 24.7% |
| Minimal / no impact | 14.5% |
Seasonal peaks
Over half of businesses that said that late payments were a problem for them said that the issue was seasonally linked, with 18.7% of businesses saying they received more late payments in summer, and 17.1% saying they received more in winter.
However, more than two fifths of businesses felt that the time of year had little impact on the problem and said they had to deal with the late payment crisis all year round.
“When businesses recognise a seasonal pattern in their late payments, invoice finance can allow them to tackle the problem for themselves,” said Thompson. “This type of funding is helping more and more SMEs to improve cash flow at challenging times of the year by providing immediate access to capital tied up in unpaid invoices.”
Question: Are late payments seasonally-linked?
| Total | |
|---|---|
| Yes - spring | 14.5% |
| Yes - summer | 18.7% |
| Yes - autumn | 6.5% |
| Yes - winter | 17.1% |
| No | 43.1% |
Support in challenging times
If late payments are stopping your business from thriving, Close Brothers could have a solution: invoice finance can enable you to access money tied up in unpaid invoices and help you manage cash flow despite stresses in other areas of your business.
“It goes without saying that the culture of late payments being seen in the UK should be addressed as soon as possible. Businesses need more protection in law to ensure that payment terms are adhered to and do not stop businesses from excelling. In the meantime, we hope that our flexible invoice finance options can support companies,” said Thompson.
*These statistics have been updated and are correct as of August 2020.
