According to a recent report from the Asset Based Finance Association (ABFA), smaller businesses are now waiting an average of 72 days to receive payment, 11 days longer than at the peak of the recession. These late payments affect UK businesses with turnovers of under £1million. However, in contrast businesses with £500 million have seen payment delays drop to 47 days.
Chief Executive of the ABFA, Jeff Longhurst, said: "Despite the economic recovery gathering pace, payment delays are getting worse, not better, for small businesses."
"Delays to payments put enormous pressure on small businesses’ cash flow – they have to meet overheads, tax bills and their own supplier invoices whether they’ve been paid or not. Smaller businesses are particularly vulnerable."
The government is helping to solve the problem and in May 2015 Business Secretary Sajid Javid announced the new Small Business Conciliation Service to help settle disputes over payment.
"As part of our long-term economic plan, we will sweep away burdensome red tape, get heavy-handed regulators off firms’ backs and create a Small Business Conciliation Service to help resolve disputes."
LDF are able to provide a number of alternative finance solutions, designed to help SMEs in navigating demands on cashflow. To discuss these facilities in more detail, contact us for more information.
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