Almost half (48 per cent) of UK small and medium-sized enterprises (SMEs) have experienced ‘recent issues’ with late payments and unpaid invoices, a new study suggests.
According to research published by the Institute of Directors (IoD) in recent days, the UK’s late payments crisis continues to pose cash flow problems for small businesses despite the introduction of a new complaints handling system – and the appointment of a Small Business Commissioner – to tackle the problem last year.
In fact, the IoD’s research reveals that only one per cent of the 787 SMEs quizzed as part of its recent survey feel that the Small Business Commissioner has helped to crack down on the UK’s late payments crisis.
Meanwhile, 30 per cent of SMEs believe that Britain’s payment system is ‘excessively bureaucratic’ while a further 20 per cent are concerned that larger businesses are implementing ‘grossly unfair’ terms and conditions into their individual payment policies.
David Watt, of the IoD, said that larger firms and corporate entities were taking advantage of a “power imbalance” in ways which were simply “unacceptable.”
“Chasing late payments can have a particularly damaging effect on our SMEs, and in some cases, it can be so bad that the SME is forced to fold due to a backlog of unpaid invoices,” he warned.
Mr Watt’s comments come at a time when separate research from cloud accounting provider Xero suggests that hundreds of thousands of small businesses are still waiting way beyond pre-agreed payment terms for most invoices to be settled.