Basware, a Finnish e-procurement vendor, together with YouGov have released a survey revealing the need for new late payment legislation among UK SMEs.
The survey covering 2,000 small businesses with less than 250 staff has found that more than half support a change in the law around late payments – with six-in-10 backing the introduction of a 45-day minimum payment term. More than six times as many SMEs want new laws compared to the ones who do not (61% vs 10%).
Despite the importance of SMEs to the UK economy the survey found that one in four of the respondents have had their financial viability put at risk due to late payment, or payment towards the end of a term agreement. That would mean around 665,000 businesses out of the 2,658,985 SMEs in the UK have come close to bankruptcy because of payment issues.
According to the same survey, some 53% of those who said their financial viability has been put at risk have been forced to use their own personal finances to keep their businesses running in the interim. Moreover, 18% of this margin said they have been forced to put recruitment on hold and a further 13% have been forced into layoffs due to the problem.
The UK economy is built on the success of small businesses – together they employ around 16 million people or 60% of the corporate workforce. The combined annual turnover of SMEs in 2017 was GBP 1.9 trillion, over half of all private sector turnover in the UK.
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