According to the latest research from Amicus Commercial Finance, the majority of small businesses issuing invoices remain unpaid within the debtor day period, often settling debt within 90 days.
16% of SMEs are not even paid back until after the 90 day period and 7% of those have yet to settle the debt after six months.
70% of SMEs surveyed said they rely on invoices being paid during the debtor day period to avoid cash flow problems. The long delay in payment results in significant pressure on cash flow for small to medium sized businesses.
Medium-sized businesses (with 50 to 249 employees) suffer the most from late payment, with 24% remaining unpaid during the 90 day period. Some of these businesses aren’t even paid at all.
Not surprisingly, 28% of SME owners or directors have reported being stressed, anxious and angry due to late payment, with a small number worried their businesses will have to close down.
Invoice finance can be a way to handle late payments, especially when they are sporadic. It can provide regular cash flow to cover the gaps in payment, helping to ease the pressure. Take a look at our late payment/debtor collection guide for further tips on improving cash flow.