Originally written by Tim Vine on Small Business
Poor payment practices continue to be a widespread issue. In 2018, Dun & Bradstreet found that small businesses were owed an average of £80,141, nearly a quarter more than in 2017 and worryingly, 17pc were owed between £100,000 and £500,000.
These numbers potentially have meaningful consequences for businesses and the wider economy. Overdue invoices can dramatically impact the cash flow of SMEs, as many of these companies lack the deep financial reserves or access to capital which can bridge the gap in payments for large businesses.
Essentially, today’s income is tomorrow’s payroll.
Any delay can have a cascading effect that strains the finances of the supplier and keeps their own vendors from getting paid on time. In fact, 31pc of respondents said that cash flow difficulties were the most serious consequence of late payments and 28pc admitted that they’ve had to delay payments to their suppliers as a result. A quarter have had to cease the supply of goods and services to customers who didn’t pay on time, and potentially lose a business relationship.
‘48pc of SME say that overdue payments put their business at risk of failure’
Perhaps the most disturbing figure uncovered was that 48pc of