The research shows that one in six SME invoices remains unpaid after 90 days and of these, almost half have yet to be settled after six months.
Medium-sized businesses with between 50 and 249 employees are the worst affected by delayed payments with a quarter of invoices remaining unpaid after their debtor day period or not at all.
The study underlines the extent to which SMEs often rely on a small number of customers and delayed payments from these can have serious consequences; according to the findings, SMEs’ top three customers on average account for almost half of their overall revenue.
As well as the financial implications, Amicus Commercial Finance examined the psychological impact on business owners caused by lengthy payment delays. Almost a third said it has caused them considerable stress and anxiety and a fifth reported that their frustration had turned into anger. One in ten admitted they became scared their business would go bust.
In order to mitigate the impact of late payments, growing numbers of SMEs are turning to invoice finance to secure reliable cashflow. While 8 per cent of firms said they currently use invoice finance an additional 19 per cent of business owners plan to use it in future, including 11 per cent in the next 12 months.
John Wilde, Managing Director of Amicus Commercial Finance, commented: “Invoice payment terms are all too often ignored and for small firms this can put their cashflow under intolerable pressure, particularly when late payers are also large customers. For business owners with healthy sales, the frustration of being forced to take out business loans or extend their overdraft to avoid becoming insolvent can be overwhelming.”
