Monday 11th December, 2017
According to a report by Sage the detrimental impacts of late payments on Small & Medium Businesses are currently equating to $3trillion globally. With 1 in 10 invoices failing to be paid on time, the study finds up to 8% of payments are either never paid or paid so late that businesses are forced to write it off.
The report also highlights that almost 40% of Small & Medium Businesses experience direct negative impacts from late payments. As a consequence of late payments, 1 in 5 say they will struggle to pay bonuses around the festive period, and 18% expect an impact on staff pay.
Alan Laing, United Kingdom & Ireland Managing Director at Sage, said, “We now know the most cited barrier to chase late payments is to protect client relationships. It’s critical this stigma around chasing payments changes so small businesses feel they can chase without fear of losing repeat business. But perhaps even more importantly, we need the UK’s culture around late payments to change, so that small businesses can get on with doing what they love – running their business – rather than worrying about when the money will come in.”
Across the 11 countries analysed Small & Medium Businesses account for at least 96% of total enterprise - ‘protecting client relationships’ is the most cited reason for not chasing late payments. This has resulted in Sage calling for a fundamental shift in culture for Small and Medium business to be proud to chase for work undertaken.
Paul Uppal, The Small Business Commissioner, said, "I wonder how a typical employed person would feel if at the end of the month they received their salaried pay cheque only to find it had been discounted by five, ten or even twenty per cent, just because their employer had paid them on time?"
"Small businesses are vital to the ongoing economic growth of the UK. My aim is to stamp out late and unfair payment practices which create cash-flow problems that so often stifle development and innovation amongst businesses such as these."