Yet another report, this time from software company Sage UK, has confirmed that small businesses are still struggling to survive the curse of late payers.
Recent reports by Intuit, the FSB (Federation of Small Businesses), Bacs and the Government itself have already painted a grim picture of SMEs crippled by cash flow issues and sometimes forced to become late payers themselves – although the Bacs report indicated that the late payment crisis had reached its peak and that late payments seemed to be on a downward trend.
Now Sage UK’s report reveals that despite the Government’s promises to tackle the problem and their plans to appoint a Small Business Commissioner, who will help small businesses settle payment disputes with larger firms, late payments continue to be a major problem for SMEs.
52% of SMEs surveyed admitted they were owed at least £10,000 in late payments, and a worrying 43% claimed they were owed over £20,000.
Sage says that the ‘shocking late payments culture’ revealed by the research ‘accentuates the critical issue of financial health for businesses’ – financial health that SMEs may be guilty of neglecting, according to Sage’s findings.
SMEsMust Monitor Financial Health
Despite 51% of firms agreeing that identifying problems with cash flow early on key to ensuring business growth, 63% of small business owners said it had been more than a month since they had checked the health of their business finances.
Robin Moore, 50 Accounts Product Manager for Sage UK and Ireland, said: “Maintaining healthy cash flow is vital for small and medium sized businesses to succeed.”
There is no substitute for keeping abreast of your business’s financial health and identifying payment problems early on. There are already measures in place to help companies who fall victim to late payers. The EU late payment directive already stipulates that public authorities and private companies must pay their suppliers within 30 and 60 days respectively, or explain why, and the Prompt Payment Code requires signatories to adhere to rules on clarifying payment policies and payment terms.
Is your business struggling to control cashflow and recoup money from late payers and defaulters? A handy guide to help you address these problems is available here: Top Tips to Tackle Late Payment
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