Majority of traders believe December is worst for late payments
More than two thirds of traders say December is the worst month of the year for experiencing delayed invoices and late payments, new research has revealed.
Some 53% of sole-traders revealed they had faced cash flow problems in the last three months too, with most of them saying it had placed avoidable pressure on their finances.
The figures from SmartTrade App, a mobile card payment application, list delayed invoiced and non-payments as a major hindrance to small business growth.
The start of a new year is also a concerning time for businesses, especially as the January Tax Assessment is due and many traders lack the extra finance in reserve to cover large sums.
For some firms, this results in large fines being accumulated, which then requires further finance in order to solve the problem.
A quarter of firms revealed that their cash flow would not return to normal until February, as they expect a number of invoices to remain outstanding until then.
Late payment issues are not restricted to newly formed firms either, according to the study, as 35% of businesses aged between three and five years old revealed they still struggle.
Six in ten business owners said that if customers could pay on completion, their cash flow would be significantly healthier.
Of all the sectors to be hit, construction was found to have the worst record for late payments, although a number of other sectors, including retail and manufacturing, also faced substantial issues.
A major issue for two thirds of the small businesses questioned was that they still do not accept card payments, despite 43% of traders indicating that using an electronic payment device has improved their cash flow.
In some instances, businesses may struggle to source alternative finance options to ease their cash flow pressures and can face insolvency as a result.
Changes to the way individuals pay for goods and services – fewer are paying with cash than at any time previously – means that businesses will likely need to adapt in order to continue expanding too.
By Phil Smith