Results from the latest Zurich SME Risk Index show that more than half of Britain’s small-and-medium sized enterprises are owed money from late payments, with estimates totalling as much as £255 billion outstanding.
The survey of over 600 SME owners showed that, of those owed late payments, one in five (20%) are owed more than £25,000 and almost one in ten (8%) are owed more than £100,000. At the extreme end of the spectrum, more than 2,600 small businesses (1%) in Britain are owed upwards of £1 million.
SMEs clearly see late payments as one of the greatest threats they face, with two thirds (67%) agreeing that late payments are leading to some SMEs being forced to close down. Two in five (41%) confirmed that late payments have had a significant impact on their own business’ cash flow, affecting a number of key business operations.
Concerns were also raised about the support on offer to mitigate the problems caused by late payments, with half (49%) of small businesses saying the government should be doing more to help SMEs in these circumstances. Perhaps more worrying still, over a quarter (28%) of those surveyed think the government is doing all it can to help SMEs, revealing a lack of optimism among this backbone of the economy, who feel the government are unable to offer further assistance with problems created by late payments.
Jason Eatock, Head of SME at Zurich said “£255 billion owed in late payments to British SMEs is an enormous sum and it is no surprise that many have experienced cash flow problems as a result.We have been warned about a “cocktail of threats” to the economy, and small businesses will need all the capital at their disposal to weather a potential storm. In an uncertain economic climate, it is imperative that SMEs receive the support and guidance they need to adequately address the central concerns threatening the viability of their businesses.”
Tom Rolfe, Co-Owner of The Channel Partnership expands “The Government has clearly recognised the risk and inefficiency of late payments and has not only introduced the prompt payment policy in 2014, but is leading by example with their own supplier payments. They have committed to paying 80% of undisputed invoices, within five days, an update to the 2008 commitment to pay 90% of undisputed invoices within ten days.”
More on the Government’s commitment and further interesting statistics can be found on the National Audit Office website here: https://www.nao.org.uk/wp-content/uploads/2015/01/Paying-government-suppliers-on-time.pdf
Protect your business against the threats of late payments by ensuring you have a suitable credit insurance policy in place. To find out more, click here.