According to a recent study by law firm MLP Law, 4% of small and medium-sized business owners experience deficits of more than GBP 50,000 a year due to unpaid bills.
As a whole, the SME sector reportedly faces annual shortfalls approaching GBP 8.2 billion as a direct result of late payments, according to figures from the Bacs Payment Schemes.
Unpaid invoices remain a common problem with almost half of small firms experiencing unpaid invoices at least once a month. Meanwhile, 52% of small business owners confirmed they are forced to write off up to ten invoices annually simply as a “bad job”.
The survey also points out that cash flow problems (84%) remain the most common reason for late payments, followed by an inability to pay employees and suppliers (36%), strained relationships with suppliers (21%) and lower than anticipated business growth (12%).
The vast majority (68%) of small firms do not seek legal advice to resolve their cash flow issues with almost half (48%) of SME owners believing it to be too expensive. Meanwhile, a third (34%) of SMEs claimed they simply did not have the time to pursue unpaid invoices.
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