More than half (53 per cent) of Britain’s small companies are owed money from late payments, with estimates totalling as much as £255 billion outstanding.
The survey by Zurich of more than 600 SME owners and decisionmakers shows that, of those surveyed, one in five (20 per cent) say their business is owed more than £25,000 in late payments and almost one in ten (8 per cent) are owed more than £100,000.
At the extreme end of the spectrum, more than 43,000 SMEs (1 per cent) in Britain are estimated to be owed upwards of £1 million.
Businesses clearly see late payments as one of the greatest threats facing the business, with two thirds (67 per cent) of those surveyed agreeing that late payments are leading to some SMEs being forced to close down.
Two in five (41 per cent) confirm that late payments have had a significant impact on their own business’ cash flow. This could potentially be affecting a number of key business operations.
Concerns have also been raised about the support on offer to mitigate the problems caused by late payments, with half (49 per cent) of SME respondents saying the government should be doing more to help SMEs in these circumstances.
More than a quarter (28 per cent) of those surveyed think the government is doing all it can to help SMEs, revealing a lack of optimism among this backbone of the economy, who feel the government are unable to offer further assistance with problems created by late payments.
Jason Eatock, head of SME at Zurich says that £255 billion owed in late payments to British SMEs is an 'enormous sum', and that it is no surprise that many have experienced cash flow problems as a result.
'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.'
Further reading on late payment
See also: Getting paid by credit and debit card