The latest research shows that the majority of Businesses (SME’s) in the UK are being paid late as a result of the pandemic. This underhand business practice is threatening the recovery of the Economy according to findings by Bibby Financial Services.
Payment times have jumped to over three weeks late for a third of the UK’s Businesses and 28% of Companies reported they had seen an increase in their bad debt ledger.
As lockdown continues to ease, financial pressures are now being faced by Small Businesses who are coming to terms with the impact of Covid-19 post lockdown.
A staggering 14% of Businesses have claimed that they have actually turned away New Business as they cannot afford to service their customers requirements with the purchase of raw materials.
While there is a clear economic cost to Small and Medium Enterprises. There is also a personal one. SME owners are struggling to balance the financial pressures of the pandemic with their own wellbeing with a third (34%) admitting to not having a single day off since the start of lockdown and 27 per cent citing a deteriorating work life balance.
The research shows that 56 per cent of SMEs will be unable to meet their running costs beyond 12 months as poor payment practices complicate already stretched supply chains. Nearly a quarter of UK SMEs have lost a supplier already due to the business closing. In addition, 12% admit to delaying a payment to a supplier in an attempt to manage cash flow.
Chris Spencer from Business Debt Collection specialists Federal Management said “Bounce back loans and the furlough scheme have helped some Businesses get through the pandemic. Now these initiatives have been scaled back, Businesses need to take a more pragmatic approach when faced with Non paying Business customers”
Business leaders are urging SME owners across the UK to take action against the flood of Unpaid Invoices affecting the economy.
David Postings, Bibby’s Chief Exec commented ““Everyone likes to talk about SMEs being the backbone of the UK economy and they clearly have a critical role to play in the country’s economic recovery, but too often we lose sight of the people that run and work in them. There are 5.9m SMEs in the UK, often employing fewer than 10 people, and for businesses of that size, it’s personal.”