Small and medium business in the UK are owed an estimated £36bn in late payments, with a fifth declining future work from bad clients, according to new research.
A new study from Barclays shows that 85 per cent of SMEs have experienced late payment problems in the past two years, with 47 per cent claiming the worst repeat offenders pay late three times or more yearly.
A third of SMEs also reported having to use personal money or assets to boost cashflow because of late payments, while a tenth said late payments nearly caused their business to fail.
Almost a third of SMEs have threatened or taken legal action and have requested payment up front.
Barclays business banking managing director Sue Hayes said: “Minimising late payments and effectively managing cashflow is crucial for the survival, as well as the growth of small businesses.
“While it goes against all natural business instincts to turn customers away, it is entirely understandable when weighed up against the overall impact of the late payment on the future of the business.”
Two thirds said that on average they had had to wait more than a month past the agreed payment date, with one in ten waiting more than six months.