The research conducted by Tungsten Corporation, has found that the number of SME’s who don’t receive payments on time has risen 9 per cent between the second quarter of last year and the second quarter of this year.
Payments are deemed late when SME’s have to wait longer than 30 days, and with 1,011 businesses surveyed, the majority of small businesses are being made to wait.
The study found that 25 per cent of companies had to wait between 31 and 45 days, and 20 per cent of companies had to wait between 41 and 60 days. Only 6 per cent of businesses had to wait between 60 to 100 days.
These overwhelming statistics show that over half of the small businesses which were surveyed suffer late payments.
Businesses in the construction sector were affected the most, with 55 per cent waiting more than 30 days, and 11 per cent increase on last year.
The West Midlands, Yorkshire and Humberside, and the North West were the areas which suffered the most, but businesses in the North East saw late payments double from the year before.
One in ten businesses in Yorkshire and Humberside said they had to wait between 61 and 100 days for payment.
Richard Hurwitz, CEO at Tungsten, said: “These figures are a telling reminder of the challenges faced by SMEs in this country. An unpaid invoice can mean the difference between a successful month of trading and a dangerous financial shortfall. In the worst case it could lead to insolvency.”
“The creation of the new role of Small Business Commissioner shows that the government is taking the problem seriously, but it’s clear that there’s work still to be done to ensure that SMEs are paid in a timely fashion.”
Mr Hurwitz also believes there is no sole cause to late payments, and that businesses can prevent this problem from reoccuring.
“There are many reasons for late payment. Sometimes buyers will wait until the last day before the invoice is due only to tell their supplier that it is missing vital information. This creates unnecessary delays. Advances in technology mean that many payments can now be processed electronically, which ensures invoices have all the necessary information, but e-invoicing was only used by a quarter of the small businesses we spoke to.
“Late payment is a problem to which there are simple, effective solutions. If companies adopt a modern approach and investigate alternative finance options, coupled with ongoing government support, we can make these business practices a thing of the past.”
