Delayed invoice payments a major issue for six in ten SMEs

A rising number of small businesses are facing financial difficulty due to delayed invoice payments, new research has revealed.

Data from Amicus Commercial Finance shows that 61% of firms see their invoices remain unpaid after the detailed debtor period.

One in six firms said invoices remain unpaid after 90 days and of those, nearly half are unpaid after six months.

This can place severe pressure on the cash flow of the companies concerned, especially when 70% of businesses report that they rely on being paid within their debtor day period in order to avoid a shortfall in capital.

The issue was particularly paramount among medium sized businesses that had between 50 and 249 staff – 24% of these firms said invoices were not paid on time, or not at all in some instances.

Some SMEs are reliant on just a few main companies for their business too, and late payments from these suppliers can cause widespread financial issues – the study found that 49% of overall revenue often comes from a SMEs three main customers.

Without alternative finance options, a business can struggle to find a solution, meaning its future might be at risk.

Options reviews can highlight some of the available solutions while businesses may opt to have a contingency plan in place as a further safeguard.

The study also found that late payments are having a negative impact on the wellbeing on business owners.

Nearly a third said it had caused significant stress while a fifth said they had become angry, such was their frustration in trying to chase payments.

One in ten business owners said they had fears their business would face insolvency should the situation not improve.

Some owners said they had been forced to take out business loans or extend their overdrafts in order to cover unpaid invoices and voiced their dissatisfaction at how complicated and frustrating the process can be.

By Phil Smith

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