Recent figures have shown that most small and medium-sized enterprises are now having to wait for more than 30 days for payments from most of their suppliers, which has served to further highlight an already significant issue. The number of SMEs that have suffered as a result of late payments has jumped by 9% in 2015’s second quarter when compared with the same period last year. An astonishing figure that truly illustrates the severity of the issue is that the United Kingdom’s smaller firms are owed an estimated £26.8billion in overdue payments.
The Expert’s View
David Posting’s UK Chief Executive of Bibby Financial Service told This is Money, “Despite efforts by the Government to tackle the issue, the scale of the problem is increasing at an alarming rate. The number of smaller firms waiting over 30 days to be paid is on the rise, while in some regions twice as many are affected by this issue compared with this time last year. “All too often, these firms are faced with the choice of accepting crippling payment terms or losing out on business. This is particularly brutal in the construction industry, where large firms have been known to withhold payment for so long that the SME sub-contractor goes out of business.”
April of next year will see new legislation introduced that will serve to name and shame businesses with the worst records of late payments. Small Business Minister Anna Soubry recently revealed that a new Small Business Commissioner will be created to name and shame the late payers, whilst small firms are to be given the right to raise funds by borrowing against unpaid invoices. This change is set to be put into effect from early next year. If you would like to discuss payment solutions with London & Zurich, then please get in touch today, either by calling 0121 418 5224 or email us at [email protected]. Alternatively, you can use our contact form.