The new research from Hitachi Capital Business Finance found that the late payment crisis is so bad that 27% of UK small business owners are forgoing paying themselves a wage so they can pay their staff on time. The research also revealed that 52% of small business owners are experiencing pain because their customers and suppliers are not paying their bills on time.
At a time when there are calls for the Government to do more to tackle the late payment crisis that hits small businesses particularly hard, the Hitachi Capital research reveals that 63% of SMEs are dealing with late payment and this is having a profound impact on their ability to conduct business.
“The industry and policy makers have been aware of the late payment issue for some time but our new research offers insight on its impact on small businesses. It’s gone well beyond being an inconvenience: late payment is putting jobs at risk, damaging the supply chain – and when small business owners have to sacrifice their own monthly paycheck you know the pain is really hitting home,” said Gavin Wraith-Carter, Managing Director at Hitachi Capital Business Finance.
- More than two in five small businesses that were struggling to survive said they were unable to pay their suppliers on time (43%). A further 29% said that late payment issues was having an adverse a knock-on affect on their long-term relationships with suppliers and customers.
- Chasing and covering late payments was also taking up unnecessary time and money. More than a quarter of respondents (26%) said they had wasted time and legal fees chasing up late payments, diverting significant time from running their business.
- With cash flow and cost control a top issue for small businesses over the summer months, almost a third of small businesses polled (31%) said they had incurred bank charges and fees for having to secure bridging finance or short-term borrowing to cover the black hole left by late payment.
- Those respondents that said their business was struggling to survive were twice as likely to get behind with HMRC payments as a result of late payment (23%) – and they are almost three times as likely as the UK average to say they had been forced to make staff redundant (14%).