Fotolia

Late payments hurting channel customers

SMEs are struggling to cope with a culture of late payments that means some are delaying settling up with suppliers

Resellers serving the SME market need to be aware of the impact on their customer base of slow payments, which are leading some to delay paying suppliers.

Late payments have been a bugbear of small companies for the last decade but research from Close Brothers Asset Finance has found that many customers think there is a now a culture of settling up slowly.

The problem is at its worst in London, the South West and Northern Ireland, according to the financial firms latest quarterly survey of SME owners.

“Late payments are a very real issue for SME business owners,” said Neil Davies, CEO, Close Brothers Asset Finance.

“In some cases directors are having to defer their own salaries, increase their overdraft or pay their own suppliers late to ensure they remain liquid, causing the vicious circle to continue," he added.

Verticals that suffer some of the most problems with late payments include transport, manufacturing and print specialists.

The prolems can leave customers trying to delay paying suppliers, finding it hard to issue wages for staff and seeking legal advice.

The channel might be able to pitch some of the more flexible finance options that are backed by specialists and vendors as one of the potential solutions.

The Close Brothers survey found that many SMEs feel they could do with stronger laws on their side to help them go after late payers.

"What these results confirm is that late payments are not merely a regional or sector issue, but one that is felt across the SME community,” said Davies.

Earlier this summer the Federation of Small Businesses (FSB) launched a debt management tool for SMEs to help avoid the worst effects of late payments.

The FSB stated that around a third of payments to small firms are late and contribute to 50,000 business deaths a year.

Dave Stallon, commercial director at FSB, said: “Late payment has been a huge and debilitating problem for smaller businesses for too long."

MicroScope+

Content

Find more MicroScope+ content and other member only offers, here.

Read more on Finance and Credit

Start the conversation

Send me notifications when other members comment.

By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

Please create a username to comment.

-ADS BY GOOGLE

ComputerWeekly.com

SearchITChannel

Close