Late payments from clients left UK SMEs £266 billion out of pocket last year, limiting their ability to grow and create more jobs, according to a report.
Research by YouGov for Crossflow Payments found that an average of 15 per cent of small- and medium-sized businesses’ turnover was held up by late payments in 2016, with one in ten saying the problem has become worse since last year’s EU referendum.
A third said they are concerned about the impact of Brexit negotiations on their business over the next 12 months, and a fifth are worried about currency fluctuations.
Late payments could also present an obstacle to the growth of the UK wider economy.
More than half of the affected SMEs said they had to wait ten days or longer after their deadlines to receive payment, meaning they cannot invest in other areas.
If they were paid on time, more than a fifth said they would increase marketing and sales budgets, 17 per cent would hire more staff and 17 per cent would increase wages.
Two thirds of those who said they would employ more staff would recruit up to five new workers, meaning late payments could stand in the way of 3.4 million new UK jobs.
“Delays in receiving payment promptly from customers is acting as handbrake on SMEs, preventing them from making key investment decisions for the future, and ultimately stunting growth,” said Crossflow Payments CEO Tony Duggan.
“In 2017, it should no longer be the case that businesses face such hurdles.
“Squaring the circle of working capital needs of corporates and their suppliers will be an increasingly important lever as business works through Brexit.
“The business community must work together in order to address this issue and explore new, innovative approaches, such as the capacity of fintech, to help solve this issue, creating a win-win for business and government.”
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