Almost a quarter (24%) of Scottish small or medium-sized enterprises (SMEs) have seen the number of late payments they receive increase since the cost of living has gone up.
Barclays commissioned YouGov to survey 500 decision-makers at businesses (56 of which were Scottish) with a turnover of less than £25m during April and May, revealing that 19% are finding it more difficult to pay suppliers themselves because of the cost of living crisis.
Late payments negatively impact a business’s income, which can result in cash flow instability, and are the single biggest cause of business failure.
For some, this owed money might prevent new hiring opportunities or investment back into the business, as 6% 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.
For some businesses, the stress of waiting on late payments has more than just an impact on their finances, as a third of respondents said they have felt anxious or their wellbeing has suffered as a result of late payments and 17% said that they have had sleepless nights.
However, 60% said they would refuse a job with a potential customer if they were known for paying late.
Small Business Commissioner Liz Barclay said: “It is utterly distressing to see that late payments for some are becoming more frequent.
“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.”
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.
“We need to put an end to late payments to unlock the full potential of the nation’s hard working businesses.”
Making sure customers pay on time can be difficult, as nearly a third of businesses (32%) said that they had involved solicitors or taken legal action to reclaim late payments.
Businesses can claim late payment interest and compensation if a payment deadline is missed. However, while 60% of the Scottish companies surveyed say they’re aware that they can take action, only 13% had done so, with 22% unaware that this was an option.
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.
