Payment delays 'causing stress for SME owners'

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Many owners of small and medium-sized enterprises (SMEs) are suffering with stress as a result of delayed payments, a new study has found.

According to Amicus Commercial Finance, nearly two-thirds of invoices issued by SMEs in the UK remain unpaid within the debtor day period.

Almost three-quarters of those affected admitted they rely on getting paid within the designated time in order to ensure there is adequate working capital.

However, the study indicated that this problem is also having a considerable psychological as well as financial impact on SME owners.

Indeed, 28 per cent of those polled revealed the problem has led to them experiencing considerable stress and anxiety.

Meanwhile, 19 per cent said they had gone beyond frustration and into anger.

Ten per cent stated that they have become so concerned about late payments that they are scared their business will collapse.

Amicus Finance pointed out that eight per cent of firms now use invoice finance in order to make their cash flow more reliable, while 11 per cent of business owners plan to adopt this approach in the coming year.

However, 16 per cent of SME invoices are not paid after 90 days, with nearly half of these still not being settled six months down the line.

John Wilde, managing director of Amicus Commercial Finance, commented: "Invoice payment terms are all too often ignored and for small firms this can put their cash flow under intolerable pressure, particularly when late payers are also large customers.

"For business owners with healthy sales, the frustration of being forced to take out business loans or extend their overdraft to avoid becoming insolvent can be overwhelming."

Mr Wilde said it is therefore understandable that many small firms are turning to invoice finance as a means of converting unpaid debts into instant working capital.