Latest data from Time Finance has uncovered the true impact of late payments for SMEs with 75% of UK businesses worrying about cashflow as a direct result of overdue invoices from their customers.
In a recent survey into the worsening challenge of late payments, Time Finance found that chasing payments was damaging customer relationships for 17% of businesses, while 8% said the lack of essential working capital meant they were unable to afford key investments.
With the rising cost of doing business, 100% of SMEs now claim that more of their customers are paying late due to increased overheads across the board.
Phil Chesham, managing director of invoice finance at Time Finance, said: “Last year, business insolvency reached a 13-year high with 22,000 business forces to fold. We need to understand the challenges that caused so many businesses to go under so that we can provide better support and avoid preventable insolvency for viable businesses. Rising costs are definitely a factor here, but businesses’ challenges do not begin and end with high overheads.
“Our research found that SMEs are owed on average £250k in outstanding invoices, and it’s no surprise that this is causing repercussions. This challenge simply isn’t sustainable for businesses. Their revenue is their lifeline; it’s how they meet their overheads and realise their ambitions. Without cash in the bank, the bills aren’t paid and growth plans are put on hold and both of these are huge threats to any business.
“Understanding the scale of late payments is essential to the service we provide at Time Finance. Invoice finance is a longstanding solution for businesses looking to build in headroom and run their business with confidence. We’ve witnessed demand significantly grow as more businesses recognise the value of this service.”
