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Survey finds 61% of small businesses want late payments legislation

Tuesday 15th May, 2018:

Basware along with YouGov have released a survey with input from over 2,000 small businesses in the UK, the results find more than half support a change in the law around late payments.

One in four of the respondents have had their financial viability put at risk due to late payment or payment towards the end of a term agreement. That would mean around 665,000 businesses out of the 2,658,9853 SMEs in the UK have come close to bankruptcy because of payment issues.

The survey also found 53% of those who said their financial viability had been put at risk (which would equate to around 350,000 individuals) have been forced to use their own personal finances to keep their businesses running in the interim.

Of those whose business was put at risk due to a late payment or payment towards the end of the payment term, 18% (an estimated 120,000 businesses) said they had been forced to put recruitment on hold. A further 13% (around 86,500 firms) had been forced to let staff go due to the problem.

Across all respondents, half of those businesses saying they have experienced late payments pointed the finger at big businesses (250 employees+) as the source of the issue.

Only a quarter of SMEs say that no bills owed to them were paid late last year, meaning up to two million firms are being routinely paid late. While there are several new options available to SMEs to help mitigate against late payments, including supply chain financing and invoice discounting, it is no wonder that so many SMEs are keen to see politicians act.

Louis Fernandes, Country Manager of Basware in the UK, said: “SMEs are the backbone of the UK economy and critical to our competitiveness through Brexit. The UK needs to take steps to help SMEs improve productivity and realise cost savings where they can. Technology will be important and we are seeing more and more firms come to us looking for help with payments automation and different financing models, but it’s clear that late payments cause massive issues for firms. This is an issue where big and small businesses can come together to solve the problem.”