During this crucial half-year stage for many businesses, Legateca, a leading platform for professional legal service providers, is drawing attention to the critical issue of late payments, revealing in new findings, that a concerning one-third of payments to small businesses across the UK are not made on time.
The average value of each delayed payment stands at £6,142, causing significant cash flow challenges for small UK enterprises that rely on cash flow.
This growing problem has also resulted in 20 per cent of small businesses encountering significant cash flow issues, hindering their growth and sustainability.
Late payments have become a pervasive obstacle for small businesses across industries, impacting their ability to manage their finances effectively. With an estimated 5.9 million small businesses in the United Kingdom alone, the consequences of this issue are far-reaching.
Legateca’s analysis indicates that if small businesses were paid promptly, the economy could experience a boost of approximately £2.5 billion annually, leading to increased productivity and overall economic growth.
Umair Zahid, CEO for Legateca, expressed concern about the significant impact of late payments on small businesses. “Small businesses are the backbone of our economy, contributing substantially to job creation and innovation. However, the prevalence of late payments is impeding their ability to thrive and fulfill their potential. It is crucial for both businesses and policymakers to address this issue promptly and implement effective measures to ensure timely payments.”
To combat this issue, Legateca calls for small business owners to be brave and take the necessary legal action in order to encourage timely settlements.
Umair adds: “So often we see that small businesses are the losers in the game of chasing payments, they’re often strapped for time and resources, with a big emphasis on confidence too – especially if they are going up against bigger organisations. This doesn’t and shouldn’t have to be the case. If work was undertaken and business owners know that they fulfilled their duties but haven’t been paid – they have every right to claim their money.”
As the issue of late payments to small businesses continues to persist, Legateca remains committed to raising awareness, offering solutions, and collaborating with businesses and policymakers to drive positive change. Umair concludes: “By addressing this pressing concern, we can create a more resilient and thriving small business sector, ensuring a stronger economy for all.”
Zakia, an SRA-regulated freelance solicitor with extensive experience in Commercial Litigation and Business Debt Recovery says. “It’s really important for small businesses to have a robust and proactive debt recovery process for late payments, which includes taking legal action where necessary and efficiently and in a timely manner. I have spoken to many small business owners, who have said they didn’t know what steps to take to recover payment for overdue invoices, it’s often overlooked but not having a clear process will impact cash flow thus impacting the overall stability of the business.”
