New research by Barclays reveals that 26% of UK small or medium-sized enterprises (SMEs) have seen the number of late payments they receive increase since the cost of living has gone up.

16% struggle to pay suppliers because of the cost-of-living crisis, rising to 33% for the Manufacturing sector and the Construction and Real Estate sectors.

With cash flow instability the biggest reason for business failure, late payment is an unwelcome precursor, stopping 10% of SMEs from recruiting more staff and 12% from investing in product and service offering to grow their business.

For some business owners, the stress of waiting on late payments has more than just an impact on their finances, with 26% feeling anxious or their wellbeing suffering, and 21% of business owners reporting sleepless nights.

However, over half (58%) say 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. However, given the cost-of-living crisis, increases in material costs and staff wages, it isn’t surprising as many firms are delaying payments until they themselves are paid.

“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.

“It’s expensive in time and money to find new suppliers. 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: “The past two years have been some of the most challenging in living memory for businesses. Along with consumers, SMEs now face the bite of the cost-of-living crisis.

“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.

“We need to put an end to late payments to unlock the full potential of the nation’s hard-working businesses. Many could use the money owed in late payments to reinvest and grow, generating a boost for the wider economy.”

Businesses can claim late payment interest and compensation from buyers missing their payment deadline. However, whilst 60% surveyed say they’re aware they can take action, only 16% had done so, with 26% unaware that this was an option.

At STA International, we always add our costs and interest to the principal sum outstanding on commercial debts, reducing the cost of recovery for our clients at worst and providing a free-of-charge service at best.

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