Shocking, but true! Risk analysis statistics pouring in from Swiss and other sources indicate that delayed payment settlements by British banks have been the cause of creating losses up to £44.6 bn for Small and Medium-sized Entrepreneurs (SMEs) in that country
The study, conducted across 1000 SME establishments in the UK, combined the feedback of owners of the businesses and also those from decision-makers in financial transactions in the industry. The stats revealed that 21% of the sample size are owed by banks amounts exceeding £25,000 each, and nearly one out of every ten respondents (9%) mentioned a loss above £100,000.
The sad part of the story is that in 64% of the cases, when the bills are already overdue for over a month in waiting for settlement from banks, credit doesn’t appear on the client’s account after another 30 days have passed! Nearly 45% of the SME business accounts face over 90 days of delay in getting their payments due from their banks reconciled. In some cases, (14%) the typical wait may go up to six months!
The devastating effect of such late payments is already showing on the balance sheets of these SMEs. Small business owners are losing out on their cash-flow situations (39%) and 24% agreed that they have gone into overdraft liquidity positions. At least 65% of the sample agree that late payments were forcing them to close down their businesses.
The industry is now looking into options of calling on the Government to step into the act to mitigate the problem. “In an environment where cash flow is key to small business survival, the situation is simply unsustainable. It is imperative that SME owners receive the support and guidance required and fair access to the funds that they are owed to secure the future of their businesses.”, said an informed Zurich source, with access to the key data in the survey.