SMEs hit disproportionately by payment delays
Small businesses are waiting over six weeks longer than big businesses for invoices to be paid, according to the Asset Based Finance Association (ABFA).
Businesses with a turnover of less than £1 million now wait 33 days longer than business with a turnover of more than £500 million, according to the body which represents the asset based finance industry in the UK and Ireland.
This represents an increase of 6% – up from 31 days last year.
According to the analysis, large companies experience an average payment of just 38 days – one day quicker than last year – while the smallest companies now wait an average of 71 days.
Jeff Longhurst, chief executive of the ABFA, said: “Whilst big businesses are enjoying more prompt payment, SMEs are suffering more than ever- the delays which became common during the credit crunch have quite clearly persisted, despite the wider economic recovery.”
“The impact of delayed payment on businesses’ cashflow and capacity to expand order books presents a serious concern- particularly for smaller companies. Even when a business is thriving, just a few unpaid invoices can end up a real threat to survival.”
“As well as paying invoices late, many companies are imposing extended payment terms on their suppliers from the outset, which can end up having a similar impact.”
The ABF is a UK-based Trade Association representing 40 members supplying factoring, invoice discounting and asset based lending to businesses in the UK and Ireland.