Late payments becoming more frequent, say Scottish firms

More and more Scottish firms are being paid late, a new poll has found, as the cost-of-living crisis puts pressure on finances.

Some 24% of firms north of the border have seen the number of late payments they receive increase, according to Barclays, and nearly a third told the bank they have involved solicitors or taken legal action to get the money they are owed.

Liz Barclay, Small Business Commissioner, said it was “utterly distressing” that late payments were becoming more common.

“However, given the cost-of-living crisis, increases in material costs and staff wages, it isn’t surprising as many firms are delaying payments until they themselves are paid,” she said.

The YouGov poll found 60% of businesses would refuse a job with a potential customer if they were known for paying late.

Ms Barclay said: “The biggest companies with the deepest pockets must realise that if they delay payments or offer unfair extended payment terms the whole of their supply chain suffers.”

Nineteen per cent of small and medium enterprises said they were finding it more difficult to pay suppliers themselves because of the cost-of-living crisis, the survey found.

Late payments can impact on a business’s income, which can result in cash flow instability, and are the single biggest cause for business failure.

Some 6% of firms asked said that the amount they are owed in late payments could be used to recruit more staff and 8% said they could expand their products or service offering.

And business owners have reported more than just a toll on their finances, the poll found.

A third said they felt anxious or their wellbeing had suffered as a result of late payments and 17% said they had sleepless nights.

YouGov pollsters asked 500 key figures in small and medium-sized enterprises with a turnover of less than £25 million between April and May. There were 56 polled in Scotland.

Hannah Bernard, head of business banking at Barclays, said: The past two years have been some of the most challenging in living memory for businesses. Along with consumers, SMEs now face the bite of the cost-of-living crisis.

“It’s more important than ever for businesses to have confidence in their cash flow, which is why we’re working with the Small Business Commissioner to continue our call for higher standards, and urging larger businesses to make good on their commitments and pay their suppliers on time.

“We need to put an end to late payments to unlock the full potential of the nation’s hard-working businesses. Many could use the money owed in late payments to reinvest and grow, generating a boost for the wider economy.”