David vs Goliath

Results from the latest Zurich SME Risk Index have revealed that larger firms are responsible for the majority of late payments made to small and medium sized enterprises. Small business owners have reported that firms bigger than their own are responsible for more than half (53 per cent) of the total late payments they would typically receive, suggesting that bigger firms are taking advantage of SMEs’ reliance on retaining their custom.

The survey of more than 1,000 SMEs reveals the severity of the problem, as almost half (45 per cent) that are subject to late payments are forced to wait up to three months to get paid, while a considerable number (14 per cent) are typically forced to wait up to six months for payment. Almost two-thirds of SMEs (64 per cent) experience typical delays of more than one month on payments which are already more than 30 days overdue.

Paul Tombs, Head of SME Proposition at Zurich, comments:

“For small companies, working with larger organisations and strong brands is an important part of building and running a successful business. But, it is a two-way street and large organisations are simply taking too long to pay small suppliers, which are dependent on reliable, regular invoicing to cover their own costs. It is not sustainable."

Estimates published by the UK Government suggest that 50,000 business closures could be avoided every year, if payments were made promptly.  Almost two thirds (65 per cent) of small business owners are seeing this pain in the market, stating that late payments are a leading factor forcing SMEs to close down.

Nearly two in five (39 per cent) small business owners have confirmed that late payments have had a significant impact on their own business’ cash flow, while almost a quarter (24 per cent) said that late payments had caused their business to go into its overdraft.

If you’d like to find out more about alternative business finance facilities, we’d love to be able to help. Why not give Regency a ring today on 0161 280 4010, drop us an email at lynnew@regencyfactors.com or browse our website for more details on how our facilities can work for you.