Businesses hit by rise in late payments
Many businesses in the UK are both getting paid - and paying - later, with the COVID-19 pandemic causing a surge in late payments. According to the latest independent research from Close Brothers Asset Finance, three in five UK SMEs have experienced delays in receiving payments, while a significant number of business owners have admitted to being forced into delaying paying invoices.
“Firms have long struggled with late payments in the UK and the pandemic has seemingly made things worse,” said Neil Davies, CEO, Close Brothers Asset Finance and Leasing.
“Our research echoes that of the Federation of Small Businesses, who found 62% of SMEs have been subject to late or frozen payments.”
Q: Have you seen an increase in late payments due to the COVID-19 pandemic?
Late payments have increased by up to 25% - 29%
Late payments have increased between 26-50% - 22%
Late payments have increased by more than 50% - 7%
We have not seen an increase in late payments - 43%
Long term problem
The issue of late payments is not new - the research tells us since 2016 the problem has been getting progressively worse. In Q4 2019, 47% of respondents answered ‘yes’ to the question ‘are late payments a problem for your business?’; in 2016 this figure was 28%.
Of the 348 respondents who said they were due outstanding money, nearly a third said they are owed over £40k, while 35% are owed between £21k and £40; a further 29% have unpaid invoices of up to £20k.
“The impacts on businesses is indisputable,” said Davies. “Small business owners are stretched enough without having to chase invoices and it stymies everything from innovation to causing investment decisions to be delayed.”
Q: What impact do late payments have on your business?
They make our cash flow difficult to manage - 251 respondents
They significantly impact our ability to trade - 114 respondents
We spend time chasing payments - 95 respondents
They have a minimal impact - 56 respondents
The full results of the latest results are available for download on Close Brothers Asset Finance and Leasing free-to-use SME Data Hub.