A recent report from Time Finance has shed light on the alarming issue of late payments affecting small and medium-sized enterprises (SMEs) in the UK.
According to the study, a staggering 75% of businesses are concerned about cashflow due to customers delaying their payments.
The survey highlights that late payments are not only causing cashflow worries but also straining customer relationships, with 17% of businesses reporting damaged relations.
Furthermore, 8% of businesses claim that the shortage of working capital has hindered their ability to make crucial investments.
Rising costs of doing business have led to 100% of SMEs experiencing more customers paying late. This, in turn, has contributed to increased overheads across the board.
Phil Chesham, managing director of invoice finance at Time Finance, said: “Last year, business insolvency reached a 13-year high, with 22,000 businesses forced to fold.
“We need to understand the challenges that caused so many businesses to go under so that we can provide better support and avoid preventable insolvency for viable businesses.
“Rising costs are definitely a factor here, but businesses’ challenges do not begin and end with high overheads.”
He added: “Our research found that SMEs are owed on average £250k in outstanding invoices, and it’s no surprise that this is causing repercussions.
“This challenge simply isn’t sustainable for businesses. Their revenue is their lifeline; it’s how they meet their overheads and realise their ambitions.
“Without cash in the bank, the bills aren’t paid and growth plans are put on hold, and both of these are huge threats to any business.”
