Idea to fine late payers unanimously backed by SMEs
SMEs rely on finance to fund their business and this is precisely why they want something done to cover the £30.2billion that they are collectively owed.
Three in five SMEs point to large businesses being the worst culprits, according to research from 2B Interface.
Recent proposals for fines or levies for late payers have won a great deal of popularity with UK small businesses.
The finance they are owed can put significant strain on their resources and can increase the likelihood of requiring business restructuring or company administration if kept unchecked.
Financial deterrents should help to incetivise those who fail to pay – an idea supported by 48% of SMEs questioned – although 36% believe additional measures would also be required.
The value of avoiding a ‘roadblock’ to your plans
“Late payment is prolific and an almost accepted part of daily business life when you run a small business,” said Beatrice Bartlay, managing director of 2B Interface.
In addition, two-thirds of businesses surveyed were unaware of EU rules regarding payments that require them to be made in 60 days unless agreed otherwise.
“It shouldn’t have to be that way,” Ms Bartlay explained. "We shouldn’t be bullied by the privilege of working with bigger brand names into accepting late payments
“This can hit our cash flow and put a roadblock on projections, forecasts and plans – especially at this time of year and at this stage of the economic upturn.”
Poor cash flow affects 44% of firms, while a quarter of businesses said late payment also affected their ability to pay off their own invoices.
This suggests that the threat of financial difficulty is holding some SMEs back, as they are fearful that a lack of payments could leave them without the finance required to run effectively.
“The negative impact of late payments cannot be under-estimated,” added Ms Bartlay.
“With SMEs in favour of strong action being taken against this silent killer of small businesses, 2014 will be a telling year in terms of changing the culture of late payment, backed up by legislation.”
By Phil Smith