Over a quarter (27%) of British small and medium-sized businesses have “admitted to being owed between £5,000 and £20,000 in unpaid invoices” according to research by Payit, NatWest’s open banking payments solution.
The impact of late payments has been felt “across the country, with SMEs reporting over a third (36%) of payments taken in an average month as late.”
London’s businesses have been “revealed to be the hardest hit, with 41% of payments coming late.”
SMEs account for “nearly two thirds (61%) of UK employment and for the backbone of the economy. Over half (55%) of SMEs say that late payments have increased in the last six months, with knock-on effects being compounded by the rising cost of doing business.”
Nearly half (46%) of small businesses “claim the time associated with chasing invoices as having the most noticeable impact, with 31% of businesses spending between 21-30 hours per month chasing customers.”
This time could be put into “improving customer service, developing new products and evolving business growth strategy; however, it is often spent chasing money that a business has already earned.”
Cashflow issues are “the other major impact felt as a result of late payments, with 44% of businesses stating it as the most pressing issue. SMEs are particularly vulnerable to the knock-on effects of volatile cashflow. It can massively impact business planning and threaten the ability to pay suppliers, staff and any clients that may be lost as a result.”
Payit by NatWest presents businesses “with a simple and fast means of collecting money from customers without businesses needing to ask for, and store, card details. Payments are settled in near-real time to help with cash flow issues, while the lack of need to enter card details or sign up creates a simple and secure process for customers. Currently, over half (55%) of SMEs are paid by bank transfer, while a third (33%) are paid by card.”
Customers are often guilty of “sending payments late unintentionally. 41% of customers gave the excuse that they had simply forgot to send a payment, while 21% claim to have sent a payment late due to not being able to find the right account details.”
Payit’s ability to generate a QR code which “can be shared directly and immediately with customers, means it provides a simple means to collect payments digitally.”
Mike Elliff, CEO of Payit by NatWest comments:
“Small businesses pave the way for growth and innovation, however, two of their most precious resources – time and money – are being wasted. As a business, knowing that you can rely on payments being received in near-real time can make a world of difference.”
Terry Corby, the Founder and CEO of campaign group Good Business Pays adds:
“The numbers revealed in this latest research from Payit are shocking and confirm why it is so important we tackle the unfair practice of companies withholding payment they owe to SMEs. Around 40% of SMEs derive all their income from B2B (business to business) sales, meaning almost 2.5 million SMEs are waiting weeks or months to get paid for products delivered or work done. “