According to new research by Tungsten Corporation about a quarter of British small and medium enterprises (SMEs) feel under financial pressure as a result of money they’re owed.
Apparently, the average SME is owed £40,857 in unpaid invoices and £20,937 of that total is overdue or late.
Richard Hurwitz, CEO at Tungsten, said: “These figures are a telling reminder of the challenges faced by SMEs in this country. An unpaid invoice can mean the difference between a successful month of trading and a dangerous financial shortfall. In the worst case it could lead to insolvency.”
1000 companies were surveyed and 23% said that late payments have put them at risk of closure.
Hurwitz continued: “The creation of the new role of Small Business Commissioner shows that the government is taking the problem seriously, but it’s clear that there’s work still to be done to ensure that SMEs are paid in a timely fashion.”
“There are many reasons for late payment. Sometimes buyers will wait until the last day before the invoice is due only to tell their supplier that it is missing vital information. This creates unnecessary delays. Advances in technology mean that many payments can now be processed electronically, which ensures invoices have all the necessary information, but e-invoicing was only used by a quarter of the small businesses we spoke to.”