Navigating the challenge of late payments

In the world of business, cash flow is king and, for small business owners, it is a lifeline that keeps their ventures afloat and enables growth.

However, in recent times, late payments have been an issue that has been casting a shadow over small businesses across the UK.

Below, we investigate this pressing concern and how it might impact your business finances.

The late payment predicament

Recent data has revealed that late payments to small businesses have reached a concerning three-year high.

On average, small businesses are now waiting for nearly 30 days to receive payments from their customers.

This represents an increase of half a day compared to the earlier part of the year.

September witnessed payments arriving a staggering 7.7 days after their due date.

The impact on small businesses

For small business owners, the repercussions of late payments are multifaceted.

They extend beyond mere financial inconvenience:

The Prompt Payment Code

The Prompt Payment Code (PPC) sets the standard for prompt payments from larger businesses to their small business suppliers.

According to the PPC, 95 per cent of invoices from small businesses with fewer than 50 employees should be paid within 30 days.

However, it’s important to note that adherence to the PPC is voluntary, which has led to concerns about its effectiveness.

Seeking solutions

While the Government has launched a review to address late payment issues, it’s crucial for small business owners to take proactive steps to mitigate the impact:

Late payments represent a genuine challenge for small business owners and, as such, it is vital to remain vigilant and proactive in managing this issue to safeguard the financial health and sustainability of your business.

By adopting sound financial practices and advocating for timely payments, you can navigate this challenge effectively and ensure the continued success of your enterprise.

To find out how we could help you manage the consequences of late payments, please get in touch.

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