According to the latest research from Assest Based Finance Association (ABFA), small businesses wait, on average, 23 days more than large businesses when it comes to payment from customers.
Those with a turnover of under £1 million have had to wait 71 days on average over the last year alone.
By having to wait longer than bigger businesses, SMEs are suffering with cashflow and are unable to pay staff or keep up with VAT payments. The business itself is hit and there is less cash for new projects, services and equipment.
While the Government is trying to get big companies to sign up to the Prompt Payment Code, it is still difficult for SMEs to continue trading if the waiting time for payment is a few weeks.
If late payments are a problem in your business, it could be worth considering a Time to Pay deal (TTP) with HMRC or a company voluntary arrangement (CVA). Cashflow problems can lead to bad debt and even legal action. The insolvency solutions above can be great ways to ease creditor pressure, help restructure debt as well as reorganise the business.