SMEs Turn Down Business to Avoid Late Payment

OverdueA new poll by YouGov has found that more than a fifth of UK SMEs are turning down business in order to avoid having to deal with late payers.

The research, conducted on behalf of Barclays, shows that 22% of small and medium-sized businesses will turn down repeat business because of previous late payment problems.

Over a million UK small businesses are subject to late payments and the total owed, according to the last set of figures from Bacs, anounts to a staggering £36 billion!

The latest research by Bacs shows that 47% of small businesses who suffer late payers have at least three late payments per year from their worst offenders.

Waiting for Late Payments

Businesses that have had to wait for money have suffered from cash flow problems and 30% of affected small firms have had to use business assets or dip into their own pockets to make up the shortfall in cash.

20% of business owners said they had suffered from severe stress at being paid late and just over 10% of SME decision makers have said that late payments had nearly folded their businesses.

As for waiting for late payments, two thirds (66%) of business owners said they had to wait a month beyond the agreed paymebt terms for their bills to be paid and 11% have even had to wait more than six months.

Fighting Late Payments

Some small businesses have fought against the tide of late payment and taken action against problem payers.

The most common approach, amongst 60% of small firms, has been keeping up the communication with customers, either stepping up the number of calls regarding bills or continually chasing the customers’ finance departments.

Threatening legal action has been an option for a third of bill chasers and as many again have asked for payment up-front.

Sue Hayes, the Managing Director of Barclays Business Banking, said:

“Faced with a continually challenging business environment, small businesses clearly have no other option than to take action against customers who repeatedly pay late. Whilst it goes against all natural business instincts to turn customers away, it is entirely understandable when weighed up against the overall impact of the late payment on the future of the business

Related Articles

SME owners should read our business advice articles about Interest on Late Payments and Managing Cashflow.

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