Quarter of small business constantly chasing late payments

Around 26% of SMEs have said poor cashflow is their biggest financial concern of the pandemic, according to a Business Challenges report, carried out by card payments company Takepayments.

The report found that these businesses are constantly chasing late payments during the pandemic with businesses in the insurance and pensions sector (46%) and charity and voluntary sector (42%) are the most fearful of late payments, with nearly half expecting to chase late payment of invoices throughout the year.

The report also said there is also across the board concern on the impact Brexit will have on cash-flow, with 21% of small business owners worried about it.

More than one in ten (15%) businesses say financial challenges will be their biggest concern for the year ahead thanks to the economic crisis brought by the pandemic, and subsequent UK lock-downs. Almost half (49%) of SMEs predict their business will make a loss or break even in the year ahead.

Businesses within the performing arts (33%), healthcare (32%), creative arts and design (26%), and hospitality and events management (26%) sectors are those most likely to make a loss this year.

Despite the government extending the furlough scheme to help reduce the number of unemployment in the UK and support UK businesses owners, three in ten (30%) admit they have already had to let staff go.

The report also revealed a potential credit management skills gap in small businesses, with almost one fifth (18%) of business owners and senior decision-makers describing their knowledge of invoicing as ‘limited’ and 19% stating they were not confident using online banking for their business.

A recent survey of 1,100 businesses showed that only 28%of SMEs have enough cash for the next 12 months. The use of bank loans by SME’s was up 82% to £104 billion last year.

The report summarised that SME’s are short of cash, are not getting paid by their customers and lack the credit management skills to navigate out of it.

Sandra Rowley at Takepayments said “It is concerning that one in four business owners are finding themselves constantly chasing up late payments. It’s not only time consuming for them but it also has a worrying impact on them.”