Britain’s late payment crisis has hit such a peak that most small business owners have been forced to cancel holiday plans to chase unpaid invoices.
Ahead of the August bank holiday, online payments company GoCardless polled those running small firms to gauge how much of an impact late payments were having on their business and work/life balance.
The findings revealed that 57% have been forced to ditch holiday plans this year in favour of chasing late payments.
Meanwhile, two thirds of respondents agreed that summer was the worst time for late payments, with more invoices paid late than any other time of year. The impact over the summer months had a significant effect on small companies.
A fifth of business owners claimed they spend up to three full working days over summer chasing late payments, while one in ten wasted nine days trying to get paid by clients and customers.
Around half of entrepreneurs already take between just one and two weeks holiday every year – below the 21 statutory days received by employees – but the late payments burden has compromised the time they manage to take away from work.
Almost two-thirds admitted they stress over unpaid invoices while away on holiday, and wished to spend that time either with family or focusing on their bottom line.
Commenting on the findings, Josh Sasto, head of partnerships at GoCardless, said: “SMEs are the lifeblood of the UK economy and it’s not right for them to be denying themselves valuable time to recharge their batteries just to chase late payments. On time payment is a right, not a privilege.”
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Recent research already confirmed Britain’s poor record on late payments. According to business intelligence firm Creditsafe, supplier payments are made an average 16 days beyond agreed terms – worse than almost every other major European economy.
Public sector suppliers
Public sector bodies have been found as guilty as private companies in failing to pay smaller suppliers. The Federation of Small Businesses (FSB) published findings that showed nine in ten public sector suppliers have been paid late before.
Overall, the FSB estimates that £14bn in small business turnover is currently held up in unpaid invoices.
“If all of your working capital is tied up in invoices, then clearly you won’t have the cash needed to invest for the future,” Mike Cherry, FSB chairman, said.
“Following the collapse of Carillion, big corporations need to realise that late payments aren’t a smart move, they’re a threat to our economy.
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