Late payments hit small business export potential

The UK’s business output is on the verge of contraction, according to a new report focusing on potential new business deals.

British businesses are being hit hard by late payment practices and reductions in working capital, new research has revealed.

Rather incredibly, the study by Crossflow Payments found that more than one in three SMEs said they had not set payment terms with their customers.

Close to a quarter of firms also complained that they are regularly paid late for invoices, which can have a severe impact on their cash flow.

Of those that have received payment late, 55% said they had to wait ten days or more past their agreed contracted terms.

Brexit has also had an impact on UK SMEs, as 11% revealed a notable worsening in payment terms during the last 12 months.

A further 8% said they have been coming under further pressure as customers have looked to lengthen payment terms in order to offset some of their own struggles.

Late payments are hitting the country’s ability to export too – the report suggests as many as 600,000 small businesses cannot expand overseas due to a lack of finance.

While a range of alternative finance options exist to support SMEs, it’s important that businesses are watchful with their finances to ensure they don’t encounter further issues.

Some 16% of businesses said they had been forced to delay payments to their suppliers as they had not been paid themselves, meaning the late payment issue influences companies across the supply chain.

Meanwhile one in ten businesses said that they had struggle to fulfil their own payroll obligations due to a lack of finance.

This means a number of businesses are facing up to the potential prospect of insolvency, and that several poor performing months could tip the balance.

Those facing up to difficulties’ may wish to undertake options reviews to find solutions to their current situations, or to consider which insolvency or recovery processes may be relevant.

Crossflow Payments Chief Executive Tony Duggan added: “UK SMEs are facing a working capital crisis at the worst possible time.”

He suggests that businesses need to focus on finding innovative methods to ensure they can continue trading effectively, even in situations when payments are delayed.


By Phil Smith


If you would like to have a free no obligation chat with one of our advisers please call us on 0207 186 1144.

View all Business Insights