Written by: Keith Tully
Published: 21st July 2014
Small to medium sized enterprises (SMEs) across the UK are said to be owed billions of pounds in late payments according to new research – with many admitting they are too embarrassed to chase payments and don’t want to run the risk of upsetting clients.
According to the study undertaken by credit control firm Satago, 81% of small business owners say they avoid chasing fellow companies for payment due to feeling ‘uncomfortable’ whilst 19% admit they are fearful of antagonising valued customers.
Unsurprisingly, this withdrawn approach has contributed to more than a third (34%) of small businesses writing off thousands of pounds of unpaid invoices every year, the research shows.
Following recent government assurance to clamp down on late payments to help small businesses, the survey results show that 24% believe the issue has worsened in the last two years with just 17% of the opinion that there has been an improvement.
According to the report, 30% of SME owners surveyed admit that taking a more proactive approach to chasing payment would deliver better results whilst 13% recognise that chasing harder would probably see them recover more than 50% of debts that ultimately get written off.
According to Satago’s research, many small businesses struggle collecting overdue invoice payments because they don't have a specific debt-chasing process; in fact, 77% do not have a designated accounts employee or a procedure in place for chasing debts whilst a vast majority have no fixed escalation process for late payments.
The study also shows that only 15% of small business owners utilise late payment regulations to charge customers for late payment.
Steven Renwick, of Satago said: “Despite losing out on thousands of pounds every year our research shows that SMEs are struggling to deal with late payments. SMEs feel uncomfortable chasing, do not want to annoy customers and a majority do not have a process in place to deal with the situation.
“The current supplier power structure means that big business is in a position to take advantage of SME and freelance suppliers.
“SMEs must recognise that proactivity can help them deal with late payers: Get a process in place, use the law and work with a third party to remove the distress of chasing.”
26th November 2020
Issues around late payments of invoices have increased significantly since the onset of the coronavirus pandemic, according to recent research.Read More
25th November 2020
The government’s plan to introduce a tiered system of Covid-19 restrictions in England once the current lockdown ends in early December has come as welcome news for some business sectors but not all.Read More