UK small businesses crushingly in favour of fines on late payments
But a third say, “it’s not enough”, in new research
Figures released today* have suggested that the UK’s largest companies are dealing a devastating blow to the smallest ones, as a new survey from specialist staffing firm 2B Interface finds that 3 in 5 (60 per cent) SMEs say enterprises are the worst culprits when it comes to paying on time – if ever.
The recent proposed levies or fines that have featured heavily in the media and in political speeches recently (from tax incursions to interest charges), have won favour with the nation’s small business community, according to the research. Nearly half (48 per cent) of UK small businesses taking part in the survey – the majority of which employ fewer than 20 members of staff – supported the idea of financial deterrents, but a further third (36 per cent) said that & lsquo;additional measures’ are required to make a difference.
Beatrice Bartlay, entrepreneur and Managing Director of 2B Interface, commented: “Late payment is a prolific and almost & lsquo;accepted’ part of daily business life when you run a small business, especially considering that two thirds (66 per cent) of the businesses we spoke to didn’t even know that current EU rules require companies to pay within 60 days, unless expressly agreed otherwise.
“But it shouldn’t have to be that way. We shouldn’t be bullied by the privilege of working with bigger brand names into accepting late payments that hit our cash flow and put a roadblock on projections, forecasts, and plans – especially at this time of year and at this stage of the economic upturn,” she said.
It was reported in October that small- to medium-sized enterprises (SMEs) were owed £30.2bn in missing and late payments in 2013. Most of the sample in this study stated that their payment terms are up to 30 days (84 per cent), with anything after this considered & lsquo;late’. Perhaps startlingly, every single business questioned said that in the past 12 months they had received at least one payment beyond the agreed period. Almost three quarters (72 per cent) of SMEs didn’t receive payment for goods or services rendered at all, on at least one occasion in the past year.
& lsquo;Poor cash flow’ was identified by the study as the number one effect of late payments, with more than 2 out of every 5 businesses (44 per cent) agreeing with this, followed by & lsquo;inability to pay my business’s own invoices and damage to reputation’, identified by over a quarter (28 per cent).
Bartlay concluded: “The negative impact of late payments cannot be under-estimated. In our research, 1 in 10 (10 per cent) business owners or managers believes that late payments actually harm their ability to grow! This is a surefire blow for surviving economic recovery, which we are all striving to do. With such a proportion of the sample in favour of strong action being taken against this & lsquo;silent killer’ of small businesses, 2014 will be a telling year in terms of changing the culture of late payments, backed up by legislation.”