UK SMEs are “crippled” by late payments with businesses chasing more than £50bn worth of invoices, according to a survey.
The average SME is owed £8,500 and spends one-and-a-half hours a day following up late invoices, said digital banking firm Tide.
Tide conducted a survey with 1,000 CEOs, founders, directors and senior management at SMEs that found the average business chased five outstanding invoices at one time.
Businesses in London have the highest late payment rate with respondents claiming an average of seven late invoices and two hours a day spent chasing them.
SMEs based in Scotland experienced the second-worst rate of late payment, with an average of six unpaid invoices and an hour-and-a-quarter spent pursuing them.
Businesses across the UK are owed over £50bn in late payments, based on around 5.9m SMEs operating in the country.
Oliver Prill, CEO at Tide, said: “It has been known for a while now that late payments are crippling SMEs, with the government having tried a number of times to address the issue.
“It is however shocking to see exactly how much time SMEs, and particularly the self-employed, are wasting by having to chase clients to pay promptly. Cash flow is crucial for SMEs, and just a few late payments can tip them into danger of becoming insolvent.”
In 2019 the government announced firms would be required to review and report on payment practices as part of efforts to tackle late payments. The Federation of Small Businesses warned that 84% of small businesses within supply chains claimed to have been paid late.
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