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Over 50,000 small businesses go bust every year because of late payments

Over 50,000 small businesses go bust every year because of late payments

Small to mid-sized enterprises are chasing approximately £50bn in late payments in the UK according to recent research, a figure that equates to five outstanding invoices per firm. 

This according to Know-it, the cloud-based credit management platform, is simply unsustainable for many businesses and as debtor days get longer the chances of business survival gets shorter.

Lynne Darcey Quigley, Founder & CEO of Know-it, commented: “It is worrying the amount of SMEs throughout the UK that are struggling because of late payments in 2021, especially with the options available for businesses to get paid on time. Offering customers an automated credit management tool can help mitigate the risk of outstanding invoices and ensure all invoices are settled within the agreed credit terms.

“We are witnessing an increasing inability for SME’s to pay overheads on time, difficulties paying staff salaries and most worryingly, a heavy reliance on invoice financing to inject capital into their businesses. A major concern for small business owners moving forward is that access to finance may become more problematic as we are faced with the financial impacts of the global pandemic”.

MBH Corporation has highlighted that 40 percent of SMEs believe the application process for funding will become more stringent, while just 10 per cent expect the process to become more simplified.

“The past 12 months have been extremely testing for business owners, with more than a third reporting an increase in the time customers take to pay invoices. The impact on those rejected financial loans may have major consequences on continuity as we move forward. The inability to make new hires, expand premises or invest in new technology to streamline processes makes the future for SMEs very challenging”.

Lynne concluded: “Unfortunately, the data highlights an increasing struggle when it comes to late payments. Despite the government outlining a route out of lockdown, many organisations on the receiving end of late payments will struggle to survive after the crisis.

The power of technology cannot be overstressed to ensure payments are made on time. It will help streamline the entire credit control process giving SMEs the ability to mitigate credit risk, increase cashflow and reduce debtor days”.

This article was originally published by i-investonline.com.

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