You’re not alone – 93% of organisations experience late payments
Nine in ten (93 percent) businesses are currently waiting on late payments from customers, according to new research. For medium sized enterprises with 50 to 249 staff, those waiting on late payments rises again to 94 per cent.
Interruption of cash flow can be a result of delayed payments that negatively impact a business’ income and ability to trade effectively. Some businesses may be unable to hire new employees or invest back into their business due to invoices not being paid on time. Worst-case scenarios may lead to the business closing its doors. Although delaying payments by clients and customers is not new to businesses, two out of five (40 percent) SMEs report that they are more likely to see late payments following the pandemic.
Lynne Darcey Quigley, Founder & CEO of Know-it, commented: “Failure to make payments on time is the leading cause of business failure. Our goal is to elevate the social conscience of larger businesses that don’t pay on time and unite small business owners in tackling this issue. A business that is concerned about late payments should take action by implementing an end-to-end credit management process.”
According to research, the UK’s late payment ‘crisis’ risks the future of 440,000 small firms whilst further studies conducted by the Federation of Small Businesses (FSB) highlighted that one in three (33 percent) of Scottish business owners say that late payments increased in the last three months of 2021.
“Increasing overheads continued public health restrictions, and mounting debts are all causing Scottish firms to struggle. An economy that is constantly plagued with late payments will hinder its growth, and hard-working business owners will be thrown into a never-ending cycle of uncertainty. The stresses of chasing late payments should never be a challenge facing SMEs in Scotland and the UK, however the problem is only getting worse.”
Lynne concluded: “SMEs are particularly vulnerable and have been significantly impacted by the crisis, subject to extended payment terms by big corporations. As we have seen from the data, businesses are left with little choice but to carry on and work with businesses deemed bad payers, often to their own detriment. To avoid organisations continuing in this vicious cycle its imperative business leaders are made aware of the tools and resources available to them, which can mitigate credit risk, reduce debtor days and increase cashflow”.
This article was first published by CCR Magazine.