#RBWeek – the perfect time to address late payments

We’re only a few weeks into the new financial year, and as we kick off Responsible Business Week 2015, now is the perfect time to address an issue that continues to weigh heavily on UK SMEs: late payments.

 

Cash is the lifeblood and fuel for growth for small businesses, vital for maintaining and improving their wellbeing. Prompt payment is critical for healthy cash flow and without it businesses may be unable to cover costs, or even pay their employees. A lack of prompt payments can have a direct effect on the livelihoods of many.

 

We’re regularly told by millions of our SME customers around the world – including more than 800,000 businesses in the UK – that late payment is one of their biggest business challenges. Our latest annual late payment study revealed that nearly two thirds of British businesses (60%) often have to wait for 60 days or more for payment. Other research we’ve conducted in this area found that the average small business in the UK is owed £12,000 in outstanding invoices and spends 336 hours per year chasing them.

 

This is an unacceptable situation, both for individual businesses and the UK’s overall economic health. Of the 5.2 million private sector businesses in the UK, 99.9% are SMEs, and they account for 60% of private sector employment, with a combined turnover of more than £1.6 trillion (47% of the entire private sector). As such, SMEs have a very real impact on the health of the UK’s wider economy, meaning there’s a pressing need for responsible practices when it comes to payment.

 

At Sage, we believe that all businesses should be treated fairly. That is why we are committed to paying suppliers within 30 days and are calling for all FTSE companies to publicly commit to move towards 30 day payment terms.

 

By agreeing to this, FTSE companies can ensure our small businesses are given room to grow and thrive, and in turn do their part in supporting the growth of the UK’s economy. This isn’t just a matter of acting responsibly, it’s ultimately a win-win situation for all.

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