Late payments could be set to hurt exports according to research from Crossflow Payments.
More than a third of small and medium-sized UK businesses are lacking contracted payment terms, according to supply chain finance Crossflow Payments, severely impacting working capital as well as exporting potential.
The new research, which involved polling of 1,000 SMEs and was commissioned by the firm, reveals 38 per cent UK SMEs receive no payment terms from their customers and that over half a million businesses give up on exporting due to chronic late payment problems.
Almost a quarter (23 per cent) said they regularly receive payment for invoices late. Of those receiving payments late, more than half (55 per cent) are left waiting ten days or more beyond their contracted terms.
More than one in ten (11 per cent) of SMEs say they have experienced a worsening in payment terms in the last 12 months, and 8 per cent are coming under further pressures as customers increase payment terms owing to concerns since Brexit.
The firm said in a release: “This dire situation leaves SMEs dangerously exposed with many expecting a further squeeze as a result of Brexit uncertainty.”
This crisis hurts staff too with nearly one in ten of those surveyed (9 per cent) admitted that late payments have meant that they have been challenged to meet their own payroll obligations.
Tony Duggan, Crossflow Payments CEO, says the trend is a challenge for the UK economy.
“There is no doubt that UK SMEs are facing a working capital crisis at the worst possible time. We face a difficult economic future as we prepare to leave the EU, so we need to find solutions for our homegrown businesses to be well placed for Brexit.”
“Businesses of all sizes need to address this growing crisis and explore innovative approaches offered by the alternative finance and Fintech community to sit alongside more traditional providers.”