UK SMEs chase £50bn in late payments
As 2020 begins, new data suggests that UK businesses are chasing around £50bn in late invoices, wasting over an hour in productivity every day. The research was conducted by digital banking platform Tide.
UK small and medium sized enterprises (SMEs) are currently chasing £50 billion in late payments, according to new research from the digital banking platform Tide. That amounts to five outstanding invoices at any one time, wasting an hour and a half every day, amounting to 900,000 hours nationally as companies fight to get paid for work they have done.
Tide polled 1,000 chief executives and senior management staff at SMEs to analyse their use of time over the working day and discovered the average amount owed per invoice was £8,500.
Michael Haston CEO of the SME-focused private equity company Leonne International, described the figures as a “damning indictment” on the state of collaborative processes between SMEs and their customers.
Haston told The Commentator: “Homegrown SMEs are the lifeblood of the economy, and what makes the UK such an exciting prospect for innovation in business across an abundance of industries,” he said.
“Additionally, the very existence of SMEs are vital to job creation and keeping the economy afloat, especially at a time of uncertainty regarding the politics of international trade opportunity, for example.Issues of late invoices can be critical to cash flow to pay staff, leaving SMEs with no other option than to utilise invoice factoring services. This process often leads to the demise of tens of thousands of SMEs a year," Haston added.
Oliver Prill, Tide’s chief executive, commented “It has been known for a while now that late payments are crippling SMEs, with the government having tried a number of times to address the issue. “It is, however, shocking to see exactly how much time SMEs, and particularly the self-employed, are wasting by having to chase clients to pay promptly.
Cash flow is crucial for SMEs, and just a few late payments can tip them into danger of becoming insolvent.”
“The fact that SMEs are spending 30 per cent of their time undertaking unprofitable admin tasks is unsustainable. “SME owners and leaders are master jugglers, they are proficient at undertaking multiple tasks at once and aren’t afraid of working long hours to fit everything in, however there is a concern that the time taken on admin will have a negative impact on the growth and success of a business.” It’s a problem that’s going to solved quickly.
Haston continued, “Unfortunately, simply urging businesses and consumers to meet their invoices in time is not enough to resolve this issue in the short-term, and certain businesses need to take the issues into their own hands. Depending on its situation, one way to stay afloat when constantly facing late invoices, would be to consider financial support provided by private equity investment – providing the business with stability and considerable opportunity for further growth.”
We are wholly dependent on the kindness of our readers for our continued work. We thank you in advance for any support you can offer.