68% of SMEs are currently waiting on late payments
According to research from Barclays, 68% of SMEs across the Midlands are currently waiting on late payments from customers.
For medium-sized enterprises with 50 to 249 staff, those waiting on late payments rise to 94%, creating an instability in cash flow.
This may be due to the pandemic as 40% of SME’s said this was the factor in receiving late payments.
Further impacts to business owners include 39% of SME’s saying their mental wellbeing has suffered and 25% who haven’t been able to go on holiday over the past two years due to money being owed to their business.
Hannah Bernard, head of business banking at Barclays, said: “Late payments are the single biggest cause of business failure. We want to unite the small business community in tackling this issue and raise the social conscience of larger businesses that don’t pay on time.
“Having a constant cycle of late payments will hamper the future growth of the economy, and fuel a never-ending cycle of uncertainty for hard-working entrepreneurs.”
Small business commissioner, Liz Barclay, said: “The consequences for wellbeing and mental health can be catastrophic. But late payments are just part of the problem. Repeated delays and excuses, and extended payment terms of 90/120 and even 360 days are common.
“Uncertainty kills small and micro-businesses as well as freelancers and sole traders. As well as customers and would-be employees we need to see potential investors refusing to invest in firms that don’t treat small suppliers well.”
Barclays says through the ‘prompt payment code’ (PPC) businesses are able to claim late payment interest and compensation to businesses signed up to the code if they miss a payment deadline. This however creates fear that this would result in a company not getting another job with the customer.