A Quarter of Small Businesses Face Closure Due to Late Payments
Half of small enterprises’ invoices are overdue with the average firm owed £40,857 and big businesses said to be worst offenders
Nearly a quarter (23%) of all small and medium UK businesses are at risk of insolvency due to late payment of invoices, according to research by Tungsten Corporation.
On average companies are owed £40,857 in unpaid invoices, almost half of which (£20,937) is overdue. In total this amounts to as much as £212bn in unpaid invoices.
The survey, which featured 1,000 small and medium businesses, found that businesses in the technology sector had been the worst affected with 32% negatively impacted by late payments.
The report also found that big businesses remain the worst offenders for paying invoices-named by 22% of the companies surveyed, followed by medium-sized businesses (11%) and the public sector (8).
The government has taken steps to counteract the issue of late payments in the UK, with small business minister Anna Soubry’s having announced this week that small firms will be “freed” from anti-invoice finance clauses in contracts.
Richard Hurwitz, CEO at Tungsten, said:
“These figures are a telling reminder of the challenges faced by small and medium enterprises 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 small and medium enterprises are paid in a timely fashion.”