Late Payment – The Biggest Problem in Business
| Posted On:
29 Jul 2015
Is your business currently owed money? Have you ever had problems getting paid on time? Unfortunately, of course you have.
According to the Federation of Small Business (FSB) the majority of businesses in the UK (a staggering 73%) have experienced late payment in the last 12 months. So more likely than not, your business has been affected one way or another this year.
The Biggest Problem in Business
Late Payment is the scourge of the business world. Poor cashflow cripples businesses, cutting them off at the knees. Small businesses are worst affected, they can’t (and shouldn’t have to) give such extended credit to suppliers. Things need to change.
The Daily Mail published a report from Bibby Financial Services which found that UK small businesses are owed an astonishing £26.8 Billion in overdue payments. On top of this, they found that 51% of firms are waiting more than 30 days for payment.
A further report by Tungsten published in the Daily Telegraph revealed that on average small-to-medium-sized enterprises are owed £40,857 in unpaid invoices with 50% of them being overdue. The report goes on to suggest that extrapolating their findings across the 5.2m strong UK small business community, this could mean total unpaid invoices worth £212bn.
Why do Late Payments Happen?
Because of late payments, 23% of firms have been pushed into financial difficulties and face insolvency. But why is this issue so commonplace?
Late payment is particularly notorious in the construction industry and for suppliers to the public sector and big business. It’s not just David vs Goliath battles though, almost every business is affected, even transactions between micro and small businesses.
Unfortunately most businesses think that extended payment periods are all part of doing business and that if you don’t comply, you’ll lose the business.
What the Government Say
The Government have acknowledged the issue of late payments, with Small Business Minister Anna Soubey saying that: “It is completely unacceptable that late-paying companies are stifling growth and productivity for small businesses and potentially putting otherwise successful businesses at risk.”
With the issue being placed front and centre by the Small Business Minister, late payment will eventually no longer be the norm.
At AcquirePay we believe that all businesses should be paid on time, every time. We created our payment gateway to help you get paid the money you’re owed, instantly. We support the Government initiative to solve the problem of late payment and believe that businesses should have the opportunity to flourish with regular, instant cashflow.