MORE than half of the UK’s 5.5 million small- and medium-sized enterprises (SMEs) are owed a total of £44.6bn in late payments, new research showed on Tuesday.
One in five firms are owed more than £25,000 and almost one in 10 are owed more than £100,000 – leading to funding gaps that significantly hit the business cash flow of 39 per cent of firms and pushes a quarter of them into overdraft, the Zurich SME Risk Index revealed.
The research, which surveyed over 1,000 SME owners and decision makers, also found that
65 per cent of the SMEs affected by late payments had to wait for longer than two months, while 14 per cent of them experienced delays of up to six months.
“£44bn owed in late payments to British SMEs is an enormous sum,” said Paul Tombs, head of SME proposition at the life insurance group.
“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.”
Half of the respondents said the UK government is not doing enough to mitigate the operational difficulties caused by late payments, which 65 per cent of them see as a factor causing businesses across the country to close down.
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