Results from the latest Zurich SME Risk Index shows more than half (52 per cent) of Britain’s small-and-medium sized enterprises are owed in total an estimated £44.6 billion in late payments.
The survey of over 1000 SME owners and decision makers shows that more than one in five (21 per cent) are owed more than £25,000 and almost one in ten (9 per cent) are owed more than £100,000.
Of those who have experienced late payments, almost two thirds (64 per cent) experience typical delays of more than one month on payments which are already more than 30 days overdue. Almost half (45 per cent) are subject to payment delays of up to three months on late payments, while considerably more than one in ten (14 per cent) typically wait up to six months.
Small business owners are seeing the devastating effects of late payments in the market, as almost two thirds (65 per cent) agree that late payments are leading to SMEs being forced to close down.
Nearly two in five (39 per cent) confirm late payments have had a significant impact on their own business’ cash flow, while almost a quarter (24 per cent) say that late payments caused their business to go into its overdraft in the past.
Concerns were also raised about the support on offer to mitigate the problems, with half (50 per cent) of small business owners saying the government should be doing more to help SMEs in these circumstances.
Paul Tombs, head of SME proposition at Zurich, comments, ‘£44 billion owed in late payments to British SMEs is an enormous sum. It is no surprise that many have experienced cash flow problems or have been forced to enter their overdrafts as a result.
‘On an individual basis, many small businesses are owed hundreds of thousands of pounds. In an environment where cash flow is key to small business survival, the situation is simply unsustainable. It is imperative that SME owners receive the support and guidance required and fair access to the funds that they are owed to secure the future of their businesses.’