Fast Facts On The ‘Late Payment’ Problem In The Uk Every Small Business Owner Should Know About
Most small business owners today have to contend with late payments – if not once in a while, at least one out of every 3 customers they have is known for sending in their payments late. But the problem regarding late payments is actually much bigger than you may think. This is where the numbers show a very clear message indeed.
Consistently late payments for any business often leads to even bigger crises such as a lack of available cash and even the inability to settle one’s own business accounts. If you have noticed that your business has had to deal with more and more late payments in recent times, it is because late payments have already become a national issue in the UK.
The facts about late payment in the UK
The fact is that nearly 1/4 of small as well as medium-sized businesses in the UK are set to face a potential crisis regarding their finances simply because of late payments. Think about this: an ordinary small or medium enterprise is owed approximately £40,800 in invoices which are unpaid, which has been determined through a survey. And out of this £40,800 in invoices which are unpaid, approximately £20,900 is actually overdue.
So in reality, if there are about 5.2 million small and medium enterprises in the United Kingdom, this roughly translates to a debt of around 212 billion pounds. The survey’s findings are troubling, especially since it gives proof of the issues faced by many small and medium enterprises run by entrepreneurs in this country. If a business has to deal with an invoice which remains unpaid, this can have a significant impact on the enterprise’s trading month and financial needs and requirements. The worst case scenario with late payment issues is, of course, a company’s insolvency.
The survey dealt with a total of one thousand companies in the UK – and about 23% of these companies have also admitted that late payments have severely affected their business operations, even at the risk of bankruptcy or closure.
There is more to the survey as well. For instance, the survey discovered that late payments have made more impact in businesses that are in the technology industry. Almost one-third of technology-related businesses have had to deal with financial issues brought on by late paying customers.
But late payments not only affect businesses involved in technology – it affects virtually every type of small and medium-sized business in the UK. One notable fact is that 22% of businesses said that most of their issues with late payments came from larger corporations, while 11% of small businesses said that medium-sized corporations gave them issues with late payments. Another 8% of small and medium enterprises also stated that public sector customers gave them the most problems with late payments.
The good news
There is good news, however. The government has already appointed a Commissioner for Small Businesses who will be responsible for monitoring these late payment issues and other issues faced by small businesses today.
If you are a business owner and have had to contend with late payments more than a few times, you can address the issue once and for all by sending your invoices early or sending them electronically, doing a thorough background check on your customers, and making sure your invoices contain the correct information. And if all else fails and you still have cashflow problems, you can always turn to Ultimate Finance (learn more at www.ultimatefinance.co.uk) for their cashflow solutions, including factoring, construction finance, asset finance, and a lot more.