Small businesses are now waiting over six weeks longer than big businesses for invoices to be paid, and Brexit could make it worse.
The Asset Based Finance Association (ABFA) says SMEs face huge pressure on their cashflow and capacity to expand order books , and big companies could use the Brexit uncertainty as an excuse for further delay.
Jeff Longhurst, chief executive of ABFA, said: “There are concerns that big business will start hoarding cash as a response to the Brexit vote. One of the ways they normally do this is by delaying payments to suppliers.”
ABFA says small businesses (turnover of up to £1 million) now wait 33 days longer than large companies (up to £500m) for payment, up from 31 days last year, representing a rise of six per cent.
Big companies now suffer an average payment delay of just 38 days- which is one day quicker than last year. The smallest companies meanwhile, now wait an average of 71 days, one day slower than last year.
Overall, the average time a UK business has to wait for payment currently sits at 61 days.
Mr Longhurst said: “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.”
He added: “Despite a number of well-meaning initiatives, late payment and extended payment terms remain an acute issue for many businesses."
He said need to protect client relationships meant there was no quick fix.
“The desire for repeat business means that many businesses are reluctant to charge clients interest, report ill-practice or to push back on suppliers imposing extended payment terms. This is particularly true for SMEs with substantial accounts."
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