Late payment continues to hit SMEs hard
New research has revealed that one in five businesses think the problem of late payment has reached its highest level since the Coronavirus pandemic began.
Small and medium sized business owners highlighted this issue in the survey by Intuit QuickBooks, as well as the threat it has on their chances of recovering from the effects of the pandemic.
Late payment can have a significant effect on cash flow, and in the current climate this is a key concern for many SMEs, particularly those without significant cash reserves.
Almost two-thirds of respondents (64%) said late payments could lead to their business going under in the future, and of these, 26% feared it could happen within three months. Shockingly, 16% even suggested that they were at risk of going under within just one month, showing how profound these impacts can be.
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Since the beginning of the pandemic, 52% of the businesses surveyed have experienced late payments. Sole proprietors were the least affected, with only 26% reporting late payments, which grew to 34% for micro businesses, 67% of small businesses (10-49 employees) and 72% of medium sized businesses (50-249 employees).
In comparison to last year, which saw around 5-10% of the total amount owed to SMEs becoming overdue on a monthly basis, the number has risen to around 30% since the beginning of the pandemic. The average amount owed to small businesses has also seen a rise from £2,000 to £6,000 in this time period.
The survey also highlighted how unprepared some smaller businesses still are, showing that only 17% have factored the impact of late payments into their cash flow forecast, and just 16% have considered this when putting together a business continuity plan.
The result could be that many more business face serious difficulties down the line, as invoices continue to go unpaid and business closures trigger a domino effect that impacts the whole supply chain.
As an award-winning debt collection agency with almost 20 years’ experience of helping businesses of all sizes to get paid sooner, we can help you collect overdue invoices and keep your cash flow healthy. Call us on 0800 9774848 or request a call back to discuss your options.