The latest industry research has found that the number of firms affected by late payments has increased, with a 22 per increase in the number of small firms spending additional money on legal action to chase payments.
Late payments can significantly affect a businesses’ cash flow, with one in five owners not paying themselves as a result. This is even worse in firms with fewer than 10 employees, with 40 per cent of small business owners not being paid on time.
The research also found that there has been a 14 per cent rise in the number of small firms being unable to pay suppliers because of late customer payments.
The situation is so bad that more than 35 per cent of small businesses have had to look for short-term borrowing options to be able to pay their own bills which has a knock-on effect in the supply chain.
However, it is not just suppliers who are affected. When payments into a business are made late, owners struggle to pay wages or invest, and any prospect of growth can be eroded.
Experts believe that this is an epidemic that will claim more and smaller business victims unless some serious action is taken and are joining campaigners in calling for the Government to do more to protect small businesses.