Small firms 'still blighted by late payments'

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Late payments are a serious issue for many small businesses

A significant proportion of the UK's small to medium-sized enterprises (SMEs) continue to face issues of late payments that could be holding many back from achieving their full potential.

New research published by international insurance provider Zurich has shown that two-thirds (67 per cent) of UK small business leaders believe that late payment problems are leading to many companies being forced to shut down.

Overall, two-fifths (41 per cent) of respondents stated that their own business has felt a considerable impact to their cash flow as a result of late payments from customers, while at present 20 per cent of firms are owed more than £25,000 in outstanding payments.

Perhaps worryingly, almost one in ten (eight per cent) UK SMEs are owed more than £100,000, while one per cent face late payments totalling more than £1 million.

Jason Eatock, head of SME at Zurich, commented: "We have been warned about a 'cocktail of threats' to the economy, and small businesses will need all the capital at their disposal to weather this potential storm.

"In an uncertain economic climate, it is imperative that SMEs receive the support and guidance they need to adequately address the central concerns threatening the viability of their businesses."

With this in mind, almost half (49 per cent) of respondents to the research stated their belief that the government should be doing more to support SMEs when faced with the issue of late payments for their goods and services.

Furthermore, the fact that a cumulative £255 billion is owed to the nation's smallest firms means action is needed on this issue sooner rather than later.