Tuesday, 17 July 2018 20:31

Late Payments to SMEs Soar By £1 BILLION in Six Months

The total value of overdue payments owed to UK small businesses has rocketed by an astonishing £1bn in just six months, according to a new report.

The survey by small business financiers Liberis found that the average SME was waiting on £11,000 in outstanding payments. When extrapolated across the country’s 5.5 million small businesses, that generates a total figure of £14.9bn - up by a billion on findings from just six months ago.

The figures further make a mockery of government claims that it is getting tough on late payment culture. Recently the Tory administration’s own Small Business Commissioner - an office set up to help SMEs fight their corner on overdue payments - admitted that he would probably not have used such a service when he was a business owner chasing debts.

The Liberis survey found that a third (30%) of small businesses it quizzed faced overdue payments. What is sobering is the amounts of money involved. While 58% of those owed money were waiting on £10,000 or less in unpaid invoices, more than a quarter (27%) were owed in excess of £30,000.

Not surprisingly, 50% said that unpaid debts had left them unable to invest in their own business, including being unable to replace or update equipment and hire new staff. And as well as the impact of not having cash they are owed available to use, 72% of respondents said they spent up to three days a month chasing invoices, at an average cost of £11,000 a year.

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This is yet more evidence of the rank inequality and financial sickness that lies at the heart of the UK economy. SMEs - officially defined as those employing under 250 people - make up 99% of all UK businesses and employ 48% of the workforce - nearly as much as mid-market companies and large enterprises combined.

What is more, small businesses contribute 37% of turnover. While the big corporations might generate 49% of total GDP, it seems absurd that they should be allowed to run roughshod over small suppliers and contractors to the extent they are.

For all its tough rhetoric on the matter, the government needs to face a stark fact. Until it decides to stand up to big business, regulate the imposition of punitive payment terms and hand out heavy punishments to those that pay late, it is effectively allowing one half of the economy hamstring the other half.

Forget about Brexit and trade deals. Until we get our house in order and back our small business sector to make fair use of the profits it rightfully earns, our economy will go nowhere.

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