The continued problem surrounding late payment to small business has been further highlighted by a new report that suggest 6 in ten invoices are still unpaid on their due date. Of those affected, almost three-quarters (70 per cent) say they rely on getting paid during their debtor day period to avoid facing a shortage of working capital.
The report has been produced by Amicus Commercial Finance, and reveals a worrying trend of increasingly late payment. Indeed, the research shows that one in six (16 per cent) SME invoices remains unpaid after 90 days and of these, almost half (7 per cent) have yet to be settled after six months.
The findings show what many SMEs will already recognise: that late payments are often concentrated in a small number of customers, with SMEs’ top three customers on average accounting for almost half (49 per cent) of their overall revenue.
“‘The frustration can be overwhelming'”
John Wilde, managing director of Amicus Commercial Finance, comments, ‘Invoice payment terms are all too often ignored and for small firms this can put their cashflow under intolerable pressure, particularly when late payers are also large customers.
‘For business owners with healthy sales, the frustration of being forced to take out business loans or extend their overdraft to avoid becoming insolvent can be overwhelming.
Wilde concludes, ‘Given this, it’s understandable that small firms are increasingly turning to invoice finance as a way of converting unpaid debts into instant working capital. Here at Amicus Commercial Finance, we combine deep sector experience with a high-touch personal service and cutting-edge technology to make the process as straightforward and efficient as possible.’
So what are businesses doing? According to Amicus, growing numbers of SMEs turn to invoice finance to secure reliable cashflow. While 8 per cent of firms say they currently use invoice finance, an additional 19 per cent of business owners plan to use it in future, including 11 per cent in the next 12 months.