News

SMEs waiting for £23bn in late payments

Poor payment practice and its damaging effects on SMEs and the wider economy have been highlighted by a new YouGov poll commissioned by Crossflow Payments. The research found that 15.4% of the annual turnover of construction SMEs was subject to late payment in 2016, equivalent to an estimated £22.6 billion for the sector as a whole.

A quarter of companies surveyed say they regularly receive late payment, with nearly half reporting that they regularly receive payments late by more than 10 days. This is holding back investment and growth in the construction sector, Crossflow says. Over a fifth (21%) of construction SMEs surveyed said that prompt payment would result in increased marketing and sales budgets, 21% said they would hire more staff and 18% said they would increase the wages of existing staff.

Crossflow Payments CEO, Tony Duggan, said: “Delays in receiving payment promptly from customers is acting as handbrake on small construction businesses, preventing them from making key investment decisions for the future, and ultimately stunting growth. In 2017, it should no longer be the case that businesses face such hurdles."

The YouGov poll also shows potential impact on payment practice caused by Brexit fears. According to Crossflow, 9% of construction SMEs say they have already experienced an increase in late payments since the EU Referendum in June 2016. A quarter (27%) expressed concern at the potential impact of Brexit negotiations on their business over the next 12 months, with a further 13% worried about currency fluctuations.

“Squaring the circle of working capital needs of corporates, and their suppliers, will be an increasingly important lever as business works through Brexit," Duggan said. "The business community must work together to address this issue and explore new, innovative approaches for the construction sector, creating a win-win for business and government.”

Crossflow Payments' offering is an alternative finance platform which the company says will improve working capital for business while providing SMEs with instant access to finance against their outstanding invoices without the need for onerous personal guarantees.

 

 

 

 

 

 

If you would like to contact Jon Masters about this, or any other story, please email jmasters@infrastructure-intelligence.com.