New analysis by insurance company Zurich finds larger corporates are usually to blame for late supplier payments.
Reports Thursday (Aug. 31) said Zurich’s new report finds that 53 percent of late payments owed to U.K. small businesses are from companies larger than themselves. Researchers calculated the average value of late payments at more than $21,000.
Further, 45 percent of small businesses waiting on late payments said they are forced to wait as long as three months to get paid; 14 percent said they wait as long as six months.
“For all companies, working with larger organizations and strong brands is an important part of building and running a successful business,” said Zurich Head of SME Proposition Paul Tombs in a statement. “But it is a two-way street, and large organizations are simply taking too long to pay small suppliers, which are dependent on reliable, regular invoicing to cover their own costs. It is not sustainable.”
The U.K. government has made several initiatives to alleviate the issue of late payments for small suppliers, having established the role of Small Business Commissioner to guide these efforts. New regulations also came into effect earlier this year that requires companies to report their supplier payment practices.
“The introduction of a champion for small businesses is a great initiative, but the new commissioner must be more than just a figurehead,” Tombs continued.
According to Zurich’s research, nearly three-quarters of SMBs surveyed said they believe the appointment of a “national champion” for small businesses would be a good thing — but a whopping 78 percent said they were unaware that the role of Small Business Commissioner had already been created. Half said they believe the U.K. government should be doing more to help the SMB community.
Separate research released earlier this year by FreeAgents found that most micro-businesses and freelancers don’t think a “late payments tsar” would make a meaningful impact on late payments practices in the U.K.