Member Article

‘Late Payment Culture’ Threatens 350,000 UK Jobs a Year

A major new report warns of the risks of the ‘late payment culture’ UK businesses are having to live through, in turn threatening 350,000 jobs a year. Businesses are being forced to take radical action to protect cash-flow, due to the number of invoices being paid late. If their biggest customer were to pay late, companies would be faced with the following consequences: forced to make redundancies (7%), stop planned investments, (17%), not paying salaries (15%) and significantly reducing innovation spend (10%).

Concur, the world leaders in employee spend management, released the report showing that 40% of UK businesses said they received a late payment in the last month, a trend which could undermine job creation.High volumes of late payments are significantly worrying when 57,960 business failures (23% of the total number of business that go bust every year) are currently caused by late payments.

In devastating news for the UK’s thriving businesses community, the research discovered that medium sized businesses (50-249 employees) were the hardest hit by late payments, dispelling the myth that the smallest companies are often worst hit.

The poll revealed that 21% of medium sized businesses, in particular, said they would have to stop planned investment, 14% saying that they would not be able to pay salaries and 15% significantly reducing innovation spend. Most worryingly, compared to 6% in small businesses and 8% in enterprise, 11% of medium sized companies said they would also be forced to make redundancies. Small and micro businesses, often not cash-rich, have the agility and flexibility to make strategic decisions when it comes to cash flow.

And of course, enterprises more often than not have a ‘cash cushion’ available to bail them out in difficult situations. But for the mid-market, they have reached a position where they need to keep salaries and expenditure consistent, meaning they lack the same agility, but may be operating at a relatively slim margin in comparison to bigger players. This is crucial information about what oft-forgotten middle of our economy.

https://www.concur.co.uk/

This was posted in Bdaily's Members' News section by Broadcast Exchange .