NEARLY a quarter (24 per cent) of small and medium-sized businesses in Yorkshire are facing a potential financial crisis due to late payment of invoices, according to newly-published research.
The average Yorkshire SME is owed a total of £45,809 in unpaid invoices, according to a survey by Tungsten Corporation, with some businesses owed up to £500,000.
When applied across the UK’s 5.2 million SMEs, the total owed could be as much as £212bn, the survey claimed.
Rick Hurwitz, CEO at Tungsten, said: “These figures are a telling reminder of the challenges faced by SMEs in Yorkshire. An unpaid invoice can mean the difference between a successful month of trading and a dangerous financial shortfall. In the worst case it could lead to insolvency.”
The survey suggests that the issue spans customer sizes and types, with 33 per cent of Yorkshire SMEs reporting that most of their late payments were from large businesses, nine per cent pointing to the public sector and eight per cent identifying medium-sized firms as being responsible for late payments. Some 26 per cent of businesses said that there was no clear pattern.
Mr Hurwitz continued: “The creation of the new role of Small Business Commissioner shows that the government is taking the problem seriously, but it’s clear that there’s work still to be done to ensure that SMEs are paid in a timely fashion.”
“There are many reasons for late payment. Sometimes buyers will wait until the last day before the invoice is due only to tell their supplier that it is missing vital information. This creates unnecessary delays.
“Advances in technology mean that many payments can now be processed electronically, which ensures that invoices have all the necessary information, but e-invoicing was only used by a quarter of the small businesses we spoke to.
“Late payment is a problem to which there are simple, effective solutions.”
Mr Hurwitz added. “If companies adopt a modern approach and investigate alternative finance options, coupled with ongoing government support, we can make these business practices a thing of the past.”