News

22 May 2018

Half of SME business owners suffering due to late payments

New research has shown that the number of SME business owners struggling financially has risen dramatically since last year leading to a rise in people suffering from mental health issues.

Half of SME owners’ businesses, 23% more than last year, have been on the brink of bankruptcy or liquidation, or could be soon due to late payments, with 52% of people blaming poor cash flow for their panic attacks, anxiety and depression.

63% of owners said late payment issues had also meant that they had not paid themselves for some time, 42% had stopped or delayed bonuses, 20% had had to pay staff late and 17% had reduced their own salary.

The research commissioned by The Prompt Payment Directory (PPD), a payment rating website for businesses, comes despite the Government’s Prompt Payment Code (PPC) and last April’s enforcement of the government’s new ‘Duty to Report’ scheme that requires large companies to report on payment practices twice a year.

It also follows official figures confirming that the number of British businesses going bankrupt reached a four-year high for 2017, with one in every 213 companies falling into liquidation, the highest since 2013.

The survey polled 1,000 UK small to medium-sized company owners who suffer from poor cash flow due to late or outstanding invoice payments. The research examined the personal, financial and business impact of late payments on owners and found the issue had worsened since PPD’s first study was launched last spring.

Top tips to help avoid late payments:

• Don’t be afraid to perform credit checks on customers to check their creditworthiness before supplying goods or services
• Be clear about your terms and conditions of payment
• Electronically deliver sales invoices and statements and automate the chasing process
• Consider invoicing upfront if feasible or ask for an upfront deposit
• Make it easy for people to pay

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