“Although there has been more discussion on tackling late payments and progress such as the government’s promise to pay its own suppliers in a timely way, this remains a huge problem for small businesses. Our recent report found the average amount owed to UK SMEs rose by almost a quarter from £64,000 in 2017 to £80,000 in 2018, causing cash flow problems and stifling future growth.
“Simply put, late payments put pressure on cashflow and the financial stability of small businesses – 48% of SMEs admit that overdue payments put their business at risk of failure. Although businesses can look at the previous payment behaviour of their customers to help with mitigation plans, SMEs often don’t have the luxury of turning down contracts and it’s virtually impossible to avoid the cashflow impact and risks associated with overdue payments. The introduction of a 30-day payment deadline and financial penalties could be what is needed to deal with this critical issue head on.”
Tim Vine, Head of European Trade Credit at Dun & Bradstreet