Late payments put a quarter of UK SMEs at risk of insolvency

The average SME is owed £40,857 in unpaid invoices, a survey by Tungsten Corporation revealed, with £20,937 of that total overdue. When applied across the UK’s 5.2 million SMEs, the total owed could be as much as £212 billion. Richard Hurwitz, CEO at Tungsten, said: “These figures are a telling reminder of the challenges faced by SMEs in this country. An unpaid invoice can mean the difference between a successful month of trading and a dangerous financial shortfall. In the worst case it could lead to insolvency.” Of the 1,000 companies surveyed, 23 per cent responded that late payments have put them at risk of closure. The issue was most acute in the technology sector, where almost a third of all businesses (32%) had been impacted financially by late payments from customers. Although 33% of businesses surveyed said that there was no clear pattern regarding the size of business and late payments:

• 22% said most late payments were from large businesses
• 11% said most late payments were from medium-sized firms
• 8% identified the public sector as being responsible for late payments

Richard Hurwitz, CEO at Tungsten, said: “There are many reasons for late payment. Sometimes buyers will wait until the last day before the invoice is due only to tell their supplier that it is missing vital information. This creates unnecessary delays. Advances in technology mean that many payments can now be processed electronically, which ensures invoices have all the necessary information, but e-invoicing was only used by a quarter of the small businesses we spoke to.” There are many reasons for late payment. Sometimes buyers will wait until the last day before the invoice is due only to tell their supplier that it is missing vital information. This creates unnecessary delays. Advances in technology mean that many payments could now be processed electronically, which ensures invoices have all the necessary information, but e-invoicing was only used by a quarter of the small businesses surveyed.