Late payments threaten 350,000 jobs annually
The UK's late payment culture threatens 350,000 jobs annually, according to a new report by spend management platform Concur.
Such is the scale of the problem that companies are being forced to take radical action to ensure that their cash flow is not adversely affected by waiting for payments.
The study found that should a firm be paid late by its largest customer, 7% would have to make redundancies while 17% would put planned investments on hold.
One in ten would cut their innovation spending, which could limit growth and product development, while 15% would delay paying their staff.
Given that the report found that 40% of UK businesses had received at least one payment late in the past month, it could be an issue for a wide-ranging set of firms across the business sectors.
Around 23% of business insolvencies annually are as a result of late payments, which equates to just shy of 58,000 firms.
Medium-sized businesses – those with between 50 and 249 staff – are also harder hit than their smaller counterparts.
This is partly down to the flexibility that exists within microbusinesses to make strategic decisions regarding cash flow, as larger firms will usually have less room to manoeuvre.
More than one in five of these mid-sized firms said they would need to halt investment, with 14% and 15% respectively delaying the payment of salaries and cutting innovation spend.
Some 11% also said they would need to make redundancies if a large owed payment was not received, comparted to 6% of small businesses.
With mid-sized firms often operating on tight budget constraints and with slim margins, overcoming any issues can be a lot more difficult.
While restructuring may help to free up funds and streamline a business, undertaking an independent business review may also help to highlight areas of strength or concern.
By seeking support, smaller firms should be able to integrate more practical approaches to business into their operations, therefore giving them a more solid base to work from.
By Phil Smith