Over a fifth of SMEs in the UK turned away future business from customers because of late payments in 2012, according to research conducted by Barclays.
The bank’s survey of 1,100 senior decision makers at SMEs found that 85% had experienced this problem in the last two years. Nearly half of those surveyed revealed that the worst repeat offenders paid late thrice a year or more.
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The impact of late payments on cash flow was also documented by the research; a third of respondents said they had to use personal money or assets to increase their cash flow, whilst 11% said late payments nearly caused their business to fail.
Sue Hayes, Barclays business banking’s managing director, said:
"Faced with a continually challenging business environment, small businesses clearly have no other option than to take action against customers who repeatedly pay late. Whilst it goes against all natural business instincts to turn customers away, it is entirely understandable when weighed up against the overall impact of the late payment on the future of the business."
Not all companies turned away business and instead used other methods to push for payment. Approximately 60% of companies chased the customers’ finance teams and a third threatened legal action, according to the Barclays research findings.
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