UK: SMEs suffer from late payment - survey

According to a survey from the Institute of Directors, 66% of SME members of the IoD have had issues with getting timely payment of an invoice, with damaging effects on their plans for growth and managing their finances. Late payment by one company pushes the problem down the supply chain, potentially affecting many more firms.

The survey was conducted between 24 November and 8 December 2014, where 925 members of the IoD with fewer than 250 employees were asked about their experience of late payment. The survey revealed that two-thirds (66%) said they had had issues with late payments of invoices, compared to a third (34%) who said they hadn’t and of those who had experienced problems (615 individuals), nearly half (47%) said the main reason for late payment was excessively bureaucratic payments systems or overly complex terms and conditions. Furthermore, 1 in 8 (12%) said that payment had been delayed because the company being invoiced had changed the payment terms and only 5% said the reason for late payment was a dispute over the invoice.

Additionally, half of SMEs who had issues with late payment said that it had forced them to change business decisions. 13% were unable to grow their business as planned because of problems getting invoices paid, while 10% said they had to reorganise their financing arrangements.

Finally, the survey revealed that over a quarter (28%) said they had been compelled to delay payment to their own suppliers, showing that one failure can affect the whole supply chain.