Britain's Tech SMEs One Step Ahead Of Failure Because Of Late Payment

Aug 10, 2015

One in four small and medium sized enterprise (SME) face a potential financial crisis due to late payment of invoices, according to new research - with the UK's critical digital sector one of the most badly-served by laggard clients.

The average SME is owed £40,857 in unpaid invoices, a survey by Tungsten Corporation revealed, with half, or £20,937, usually past due. That means that in any given day of the year, total owed companies could be an insane £212bn, says the company (as there are 5.2 million SMEs in the country).

Of the 1,000 companies surveyed, 23% warned that late payments have put them at risk of closure.

And the issue was most acute in the technology sector, where almost a third of all businesses (32%) had been impacted financially by late payments from customers.

A fifth (22%) of those surveyed saying most of their late payments were from large businesses, while 11% pointed to medium-sized firms - while 8% identifying the public sector as being responsible for late payments. However, a third that there was no clear pattern of whose poor admin was holding back their business.

"These figures are a telling reminder of the challenges faced by SMEs in this country," commented Richard Hurwitz, CEO at Tungsten.

"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.”

Buyers Claiming Vital Data Missing

Hurwitz believes 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.”

Experts believe the trend is down to unscrupulous buyers waiting until the last day before the invoice is due, then buying more float-time by telling their supplier that it is missing vital information.

The findings come from research carried out last month among a thousand senior decision makers in small and medium sized businesses, defined as up to 250 employees.

(c) 2015 24n.biz

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