Owners of UK small and medium-sized enterprises (SMEs) report that their cashflow is being “tested to the limit” by the problem of late payments, according to a survey by alternative finance provider Platform Black.
The company says that it surveyed hundreds of UK businesses and two thirds said that clients are taking longer to pay than they did a year ago, while 33% said that at least half their clients routinely pay their debts late.
Seventy-eight per cent of late payments are more than 10 days overdue and 31% are more than a month past the due date.
Platform Black said that one SME owner who responded to the survey wrote: “Clients now see it as their right to pay late. This cripples cashflow and damages our confidence. We work in constant fear of taking a big hit.”
“Our research confirms what many businesses have long suspected – that growing numbers of SMEs risk falling into a double-pronged liquidity trap,” said Platform Black’s chief executive officer (CEO), Christopher Shaw. “Five years after the credit crunch first hit, banks are still withdrawing many SMEs’ overdraft facilities, while the lack of overall liquidity has trickled down industry to cause an epidemic of late payment.
“Even vibrant companies with a strong order book are being stretched to breaking point by a perfect storm of late-paying clients and banks that are reluctant to offer credit. As a result alternative sources of finance have moved from the exotic to the essential.”
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