The rising cost of living in the UK hits businesses by more late payments. Source: pexels.com
Barclays has found that 26% of UK SMEs have seen the number of late payments they receive increase since the cost of living has gone up.
The new findings indicate that rising prices have started to impact payments between businesses, as 16% of SMEs said that they’re finding it more difficult to pay suppliers themselves because of the cost of living crisis, rising to a third in the Manufacturing (33%) and the Construction & Real Estate (33%) sectors.
Late payments negatively impact a business’s income, which can result in cash flow instability, and are the single biggest cause of business failure.
For some businesses, this owed money might prevent new hiring opportunities or investment back into the business, as 10 per cent said that the amount they are owed in late payments could be used to recruit more staff and 12% said they could expand their products or service offering, growing their business.
For some business owners, the stress of waiting on late payments has more than just an impact on their finances as over a quarter (26%) said they have felt anxious or their wellbeing has suffered as a result of late payments and a fifth (21%) of business owners responded that they have had sleepless nights.
However, over half (58%) say they would refuse a job with a potential customer if they were known for paying late.
Making sure customers pay on time can be difficult, as over a third of businesses (39%) said that they had involved solicitors or taken legal action to reclaim late payments. However, this is less common among smaller businesses, with only 31% of businesses with turnover less than £2m responding that they had taken legal action, compared to half (51 per cent) of businesses with turnovers above £2m.
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