SMEs turn down business as a result of late payment

Increasing numbers of SMEs have had to turn down business in a bid to combat late payment, a new report has found.

According to the research from Barclays, 22 per cent have declined to do business with customers who have not paid on time in the past.

Over the last two years 85 per cent of SMEs have been affected by the issue, with 47 per cent claiming their worst repeat offender paid late three times a year or more.

Sue Hayes, managing director of Barclays Business, said that minimising late payments and managing cash flow is crucial for the survival of SMEs.

“With one in five businesses that cease trading citing bad debt as the reason, it is vital that SMEs tackle this problem and take action before it is too late,” she added.

The research also revealed that 30 per cent of respondents who have experienced late payments have had to use personal money or assets to boost cash flow, while 20 per cent suffered extreme stress as a result.

Furthermore, 11 per cent of those questioned said that late payments nearly caused their companies to fail.

Some 66 per cent of respondents said that on average they have had to wait more than a month past the agreed payment date for a bill to be paid, while 11 per cent claimed they had to endure a six-month wait.

By Kirsty Hewitt EN For Business