Concern Amongst SMEs About Late Payers

Many businesses are reliant upon their customers paying their invoices on time to ensure cash flow liquidity. Perhaps none more so than the owners of SMEs especially those who may have recently set up a new business venture.

Some research has been carried out by Hitachi Capital UK relating to the late payment of invoices submitted by SMEs to their customers that gives cause for concern. This research reveals, amongst other things, that the business growth of many SMEs is being set back.

A particular concerning figure is that almost 75% of SMEs have in the last year had one customer who has not paid their invoice by the due date. If a new business has very few customers then just one not paying their invoice on time could have a devastating impact on the performance of that SME – in particular if it is a large customer/invoice amount.

Another worrying figure is that 34% of SMEs have had customers attempting to reduce or delay the invoice payment. This is obviously not good business practice and may discourage wanting to do business with that customer in the future. In fact, 21% of SMEs have actually refused to take on work or supply a customer who has a poor reputation for paying on time or was renowned for giving unreasonable payment terms.

Readers may be surprised to hear that in the region of 40% of owners of SMEs have had to inject their own personal funds into the business to aid cash flow perhaps because they had reached the limit on their business overdraft or maybe to cover a business loan repayment due to a customer not paying their invoice within the agreed timescale.

If you are an SME that is encountering cash flow problems or feel that you are shortly going to do so then why not get in touch with us and we will introduce you to a specialist who may be able to provide you with some advice about how best to deal with the situation.

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