Barclays said its new findings indicate that rising prices have started to affect payments between businesses, as 19 per cent of small or medium-sized enterprises (SMEs) said they’re finding it more difficult to pay suppliers themselves as outgoings increase.
The report also found that 6 per cent said the amount they are owed in late payments could be used to recruit more and 8 per cent said they could expand their products or service offering.
Furthermore, a third of respondents said they have felt anxious or their wellbeing has suffered as a result of late payments and 17 per cent said they have had sleepless nights.
However, firms are not tolerating the issue – six in ten say they would refuse a job with a potential customer if they were known for paying late, and about a third of businesses report having involved solicitors or taken legal action to reclaim late payments.
Companies can claim interest and compensation if a payment deadline is missed, but Barclays found that while 60 per cent of firms in Scotland surveyed know they can take action, only 13 per cent had done so.
Small Business Commissioner Liz Barclay said late payments becoming more frequent for some is “utterly distressing” but not surprising.
“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. The talented people who keep them supplied with goods and services from which they make their money will go to the wall and struggle with mental health issues.
“Now, more than ever, bigger customers must treat smaller suppliers fairly, and #PayDontDelay. Call us for help before taking legal action.”
Hannah Bernard, head of business banking at Barclays, said: “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.”