Late payments damage the UK economy, research shows
Late payments are a headache that most small businesses are familiar with, but new research shows that late payments create problems for the economy as a whole.
Figures published by the Department for Business, Innovation and Skills show that UK SMEs are losing £250 billion in cash flow as a consequence.
Because SMEs tend to be positioned towards the end of the supply chain, they suffer disproportionately more from late payments, whilst being the least well-positioned firms to cope with them.
While the largest businesses wait just 48 days for payment, businesses with annual turnovers below £1 million wait on average 72 days.
The seriousness of the situation is underlined by the findings of a recent survey in which 23 per cent of 1,000 SMEs questioned said that they had been put at risk of closure by late payments.
Beyond this, the impact of late payments can extend to discouraging investment or new hires.
With SMEs making up 47 per cent of all private sector turnover, the loss of £250 billion in cash flow has consequences extending across the UK economy.