Recent research has found that 53 per cent of late payments made to small and medium sized enterprises (SMEs) are the fault of larger businesses.
Furthermore, out of over 1,000 SMEs surveyed, 14 per cent said that, on numerous occasions, they have been forced to wait up to six months for payment, and almost two thirds said they regularly experience delays of more than one month on payments, which have been already overdue by more than 30 days.
In addition, the results also showed that 39 per cent of business’ cashflows are significantly affected by late payments, and almost a quarter of owners are required to go into their business overdraft to keep their business afloat.
To tackle payment dispute issues, the Government have appointed a Small Business Commissioner, who will support small businesses from this autumn onwards.
Margot James, Small Business Minister, said: “Addressing the barriers businesses face when scaling up and growing is an important part of a modern Industrial Strategy, and this appointment will play an integral role in ensuring small businesses have the support they need to thrive and grow.”
According to Government estimates, 50,000 business closures could be avoided every year if payments were made on time, and it will be the responsibility of the Small Business Commissioner to ensure that progress is made.
The majority of small business owners welcome the support from the Government and think that having a ‘national champion’ for small businesses is a good idea, although 78 per cent of respondents said that they were not aware of the new appointment.