NEARLY a quarter of all small and medium sized businesses in the UK are facing a potential financial crisis due to late payment of invoices, according to newly-published research.
The average SME is owed £40,857 in unpaid invoices, a survey by Tungsten Corporation revealed, with £20,937 of that total overdue.
When applied across the UK’s 5.2 million SMEs, the total owed could be as much as £212bn.
Richard Hurwitz, CEO at Tungsten, said: “These figures are a telling reminder of the challenges faced by SMEs in this country. 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.”
Of the 1,000 companies surveyed, 23% responded that late payments have put them at risk of closure. The issue was most acute in the technology sector, where almost a third of all businesses (32%) had been impacted financially by late payments from customers.
The survey results suggest that the issue spans customer sizes and types, with 22% of those surveyed saying most of their late payments were from large businesses, 11% pointing to medium-sized firms and eight per cent identifying the public sector as being responsible for late payments. Some 33% of businesses surveyed said that there was no clear pattern.