Businesses hit by rise in late payments

Former editorial member Lanna Deamer working on Startups Magazine's editorial…

“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.”