Late payments harm small and medium businesses across the country. In fact, around 50,000 of these stop trading every year due to this problem alone, causing untold damage to the entire UK economy.
“We spend a disproportionate amount of time chasing, chasing, and chasing again. Often escalating to CEOs etc which is not helpful for those longer term relationships.”– SME founder
We recently commissioned a YouGov survey with 500 business-to-business SMEs of up to 49 employees to better understand the impact of late payments. Of the businesses surveyed, 68% confirmed they regularly experience late payments, and 62% spend time each week chasing overdue invoices. This problem is seen across all business sectors, as seen below.
The impact of late payments is high
Not only do late payments affect cash flow, but they also create huge logistical and payroll costs as businesses struggle to recover their hard-earned money. After countless hours of chasing, businesses might avoid working with their late-paying clients, which in turn damages the client’s future supply chain and long-term business relationships. Ultimately, this has the power to slow down business on a global scale.
“We have to put pressure on the client’s account system. Normally we’ve got some cash in the business, but once we’ve paid personal and corporation tax, we have to consider other finance options – such as using our overdraft or considering a loan.”– SME founder
What’s more, new research shows how late payments cause anxiety, depression, and stress to 62% of small business owners. All in all, payments hamper SMEs’ attitude to risk and growth by leaving them unable to plan for the future.
The full picture
Our findings highlight the devastating impact of late payments for SMEs and how it reaches far beyond the invoice itself. Across every B2B business sector, every region, and every size of SME, nobody escapes late payments.