Late payment problems weighing heavily on SMEs

More than a third (37 per cent) of small and medium-sized enterprises (SMEs) have experienced cash flow difficulties as a direct result of late payments, a new study has revealed.

Research carried out by the Federation of Small Businesses (FSB) suggests that tens of thousands of SMEs are struggling with late payments – with an estimated 50,000 SMEs being forced to fold every single year.

30 per cent of businesses have been forced to use an overdraft in order to bridge the gap, while 20 per cent claim that they have suffered significant financial losses as a result of late payments, the FSB’s study reveals.

The Government is under mounting pressure to act to alleviate the UK’s so-called ‘late payment crisis’.

A separate study highlighted in The Telegraph in recent days suggests that businesses are wrestling with a toxic cocktail of currency volatility, higher business rates and political uncertainty.

1,000 business and SME leaders were asked to share their views in terms of what they thought would be most likely to ease the existing pressure on their finances.

Almost a third (29 per cent) of businesses said that they would like to see the Government lower business rates.