U.K. regulators may be working to improve payment terms and times to small suppliers, but new data from Crossflow Payments suggests terms have actually gotten worse.
Revealing its research Tuesday (July 11), Crossflow Payments found one-in-10 SMEs said their payment terms have worsened over the last 12 months. Further, 38 percent said they have no set payment terms, while 23 percent said they regularly receive payments late.
Eight percent told researchers that they are facing greater pressure because of lengthened payment terms from their business customers, a direct result of Brexit, they said.
More than half of SMEs that said they must wait at least 10 days past due to see payment.
“There is no doubt that U.K. SMEs are facing a working capital crisis at the worst possible time,” said Crossflow Payments Chief Executive Tony Duggan in a statement. “We face a difficult economic future as we prepare to leave the EU, so we need to find solutions for our homegrown businesses to be well placed for Brexit.
“We need to look at these new financing solutions and a fresh approach to avoid subjugating U.K. enterprises and putting our economy at risk,” the executive continued. “Businesses of all sizes need to address this growing crisis and explore innovative approaches offered by the alternative finance and FinTech community to sit alongside more traditional providers.”
According to the survey, 16 percent of SMEs said they have been forced to delay their own payments to suppliers as a result of getting paid late; nine percent added that it has been tough to pay even their own staff.
The late payments struggle seems to continue despite government efforts to combat the issue.
Earlier this year, new Duty to Report rules came into effect, a regulation that requires large companies and LLPs to publicize their B2B payment practices. The rules also make noncompliance a criminal offense.
The same week Duty to Report came into effect last April, Bottomline Technologies also released its own data on late supplier payments. According to that survey, 38 percent of financial professionals said there is a general ethic of slow payments among large businesses that stands as the top challenge to accelerating invoice payment times. When focused on financial professionals at SMEs, that figure climbs to nearly half.