Late Payments Causing Small Businesses To Miss Out On £250bn In Liquid Cashflow

An average small to medium-sized enterprise spends 130 hours a year chasing outstanding invoices and overdue payments

Late Payments Causing Small Businesses To Miss Out On £250bn In Liquid Cashflow

UK small businesses are missing out on £250bn worth of liquid cashflow due to late payments, according to a new report by Siemens Financial Services.

It’s revealed that an average small to medium-sized enterprise spends 130 hours a year chasing outstanding invoices and overdue payments, equating to a cost of £10.8bn per year.

When this figure is combined with the average value of unpaid invoices, it equates to £250bn.

Small firms appear to suffer from this ‘late payment epidemic’ disproportionately more than larger enterprises, and its suggested that this is because they tend to be positioned towards the end of the supply chain.

Invoice Finance and Your Small Business

Indeed, firms with an annual turnover of under £1m wait on average 72 days for invoices to be paid, compared to just 53-54 days for those with a turnover between £1m and £10m – while big corporations need only wait 48 days.

It’s suggested that increasingly popular 90-day payment terms, normally implemented by larger businesses, is compounding the cashflow crisis.

While many accept that cashflow problems are part and parcel of the small business space, businesses are advised to consider invoice finance as a possible solution.

Ian Cole, head of Invoice Finance, Siemens Financial Services, said:

“Small businesses make an important contribution to the economy, accounting for 47% of all private sector turnover, yet they continued to plagued by lengthy invoice terms and late payments.

“These continuing problems mean that an increasing number are looking to invoice finance as a solution. Indeed, figures show that invoice finance continues to grow in popularity; funds provided to small businesses recently exceeded £20bn for the first time.”

Struggling with late payments? Read our advice piece here – and get what you’re owed!

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