Late Payment - £8.3 billion owed to small companies causes cash flow headache

According to new research from Barclays Local Business, the UK's small and medium sized companies will be owed a staggering £8.3bn at the end of February, due to late payment.

On average, small firms are owned £2,000 at any one time (based on the standard 30 day invoice payment window). Entrepreneurs will typically have to wait an extra fortnight on top of this time period before they receive the funds.

According to the research, 59% of SME's suffer late payment problems - with 33% saying that the failure of clients to pay on time actually risks the survival of their businesses.

John Davis, marketing director for Barclays Local Business said, “The fact that SMEs in the UK are facing a £8 billion deficit due to late payments is extremely worrying. A regular and reliable cashflow is essential to the smooth, day to day running of a business – particularly a smaller one - and the majority of SMEs cannot afford to wait on money they are owed without feeling the impact on their bottom line."

“Chasing up late payments is a massive drain on small organisations, which can be particularly damaging in a challenging economic environment. Although the leap year provides many SMEs with an extra working day, it’s one that could be put to far more productive use than chasing cash they should have already received.”

You can read about various cash flow solutions, such as invoice financing and factoring in our Business Finance section.