A survey has revealed that most UK small businesses would rather keep quiet and accept late payment, than put the relationships with their clients at risk.
According to "Taking Notice Of UK Business", prepared by the Small Business Commissioner, Paul Uppal, and Growth Street, 75% of SMEs surveyed in the UK would not take action against a late payment to maintain relations with their clients, while 76% said that they would be more worried their invoices would not get paid if they took action against late payments.
The white paper was based on a survey of 500 UK SME decision makers in June.
Most of the businesses surveyed had payment terms of up to 30 days, while only 14% of them had payment terms greater than 61 days. Even with the low number of the surveyed businesses agreeing to longer payment terms, 86% of those businesses experienced late payments for their goods or services. Of these businesses, 43% of them had experienced late payments for their goods or services from large businesses. 82% of that same group said that they were not getting paid at all for their work.
When asked why they did not take action when invoices remained unpaid, besides protecting client relationships, 79% of the surveyed SMEs said it was time consuming to chase for payment, and it came with low pay-offs. While 71% said it is because there is a lack of support from the government or local authorities, making the lack of support from the authorities a concern.
Paul Uppal, Small Business Commissioner, said: “The key findings in this survey highlight that small businesses tolerate late and non-payment due to a fear of reprisal…through my role, I am committed to keep the spotlight on this issue and instill confidence in the minds of small businesses."
“Every business should have the right to know when and if they will be paid,” said Greg Carter, chief executive of Growth Street. “The fact that a third of all businesses have been subject to unfair payment practices is a shocking statistic – more needs to be done to educate SMEs about the options available and empower them to act against poor payment practices," he said.