Are you a new business? Or an existing business interested in our services?Get a quote
Economic uncertainty and rising prices have seen 52% of businesses paying invoices late due to cashflow problems
Over half (52%) of businesses have paid a supplier late this year, with the average payment 22 days late while up to 21% of businesses are paying suppliers over a month late, revealed research by software provider Ivalua.
Delays in payments are leaving smaller businesses at risk of insolvency and are having a knock-on effect on supplier payments.
Smaller suppliers competing with large businesses are most at risk of closing down due to financial instability.
Not only are businesses at financial risk, but they are also at risk of being non-compliant if they do not make payments when due.
Stephen Carter, director of payments strategy at Ivalua said: ‘High interest rates, increasing market uncertainty, and rising costs are exacerbating the global cash flow crisis. Last year, more than a third (36%) of UK businesses extended payment terms for suppliers, and the problem has only got worse.
‘Delayed payments are stalling available funds for businesses, causing untold disruption and stifling innovation. Businesses must play catch up on payments to reduce the pressure on suppliers. If not, they risk putting their suppliers out of business and operations will grind to a halt.’
Paying on time is also vital to secure business with suppliers.
In a bid to reduce the number of late payments to small businesses the government is updating the Reporting on Payment Practices and Performance Regulations, and ‘broadening the powers’ of the Small Business Commissioner, who is responsible for the late payment regime.
Business secretary Kemi Badenoch said: ‘SMEs make up 99% of firms in the UK and are the lifeblood of our economy. I know that late payments are a massive barrier to growth and I am determined to fix that.
‘SMEs that are paid on time can do more business, scale up and make more profits, delivering growth for the economy.’
The Department for Business & Trade has estimated that timely payments to small businesses could lead to a £2.5bn boost to the economy and prevent a further 50,000 businesses from closing.
Brearley & Co Accountants are pleased to offer a free, no obligation, initial consultation with one of our experts who will be happy to discuss your business needs and how we can help you.Contact