Thursday, July 7, 2022
BusinessQuarter of Scots businesses hit with late payments due to cost of...

Quarter of Scots businesses hit with late payments due to cost of living crisis

ALMOST a quarter of Scots businesses are being hit by more late payments due to the rising cost of living, according to research.

New findings from Barclays indicate that 24% of Scottish small or medium-sized enterprises (SMEs) have seen the number of late payments they receive increase since the cost of living has gone up.

The new findings indicate that rising prices have started to impact payments between businesses, as 19% of SMEs said that they’re finding it more difficult to pay suppliers themselves because of the cost of living crisis.

Late payments negatively impact a business’s income, which can result in cash flow instability, and are the single biggest cause of business failure.

Woman keeping track of late payments.
Almost 20% of SMEs have found it hard to pay suppliers themselves because of the cost of living crisis.

For some businesses, the stress of waiting on late payments has more than just an impact on their finances as a thirf respondents said they have felt anxious or their wellbeing has suffered as a result of late payments.

However, 60% say they would refuse a job with a potential customer if they were known for paying late.

Small Business Commissioner, Liz Barclay, said: “It is utterly distressing to see that late payments for some are becoming more frequent.

“However, given the cost of living crisis, increases in material costs and staff wages, it isn’t surprising as many firms are delaying payments until they themselves are paid.

“The biggest companies with the deepest pockets must realise that if they delay payments or offer unfair extended payment terms the whole of their supply chain suffers.

“The talented people who keep them supplied with goods and services from which they make their money will go to the wall and struggle with mental health issues. 

“It’s expensive in time and money to find new suppliers.

“Now more than ever bigger customers must treat smaller suppliers fairly.”

Hannah Bernard, Head of Business Banking at Barclays, said: “The past two years have been some of the most challenging in living memory for businesses.

“Along with consumers, SMEs now face the bite of the cost of living crisis.

“It’s more important than ever for businesses to have confidence in their cash flow.

“We’re working with the Small Business Commissioner to continue our call for higher standards, and urging larger businesses to make good on their commitments and pay their suppliers on time.

“We need to put an end to late payments to unlock the full potential of the nation’s hard working businesses.

“Many could use the money owed in late payments to reinvest and grow, generating a boost for the wider economy.”

Making sure customers pay on time can be difficult, as nearly a third of businesses said that they had involved solicitors or taken legal action to reclaim late payments.

Businesses can claim late payment interest and compensation if a payment deadline is missed.

However, whilst 60% in Scotland surveyed say they’re aware that they can take action, only 13% had done so, with 22% unaware that this was an option.

Over the last few years, Barclays has announced a number of partnerships in their push to give businesses alternative methods of finance and protection for their enterprises and their cash flow.

Two of these include MarketFinance and Nimbla, which provide invoice financing and invoice insurance respectively.

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