Small and medium-sized enterprises (SMEs) are owed approximately £112bn in late payments, according to new research, with buyers "holding back" º£½ÇÊÓƵ growth.
Nearly 5.5m companies with fewer than 250 employees and modest revenues are considered the "backbone" of the º£½ÇÊÓƵ economy and crucial for driving growth, as reported by .
However, new research by the Centre for Economics and Business Research (CEBR) has suggested that the º£½ÇÊÓƵ's smallest firms are owed an average of £42,000 in overdue invoices.
Persistent late payments, as revealed in an analysis of 1.2m anonymised invoices issued by HR software platform Sage, which commissioned the report, are "choking cash flow[s]" and hindering investment.
The º£½ÇÊÓƵ government has prioritised delivering growth, with agreements on pension fund investments and reforms to the º£½ÇÊÓƵ immigration system highlighted as key policies to stimulate economic recovery.
Business Secretary Jonathan Reynolds has initiated a consultation on late payments to help get cash flowing into businesses as part of efforts to boost º£½ÇÊÓƵ growth.
"This isn't just an inconvenience, it's holding back 5.5 million SMEs which are the backbone of the º£½ÇÊÓƵ economy," Reynolds commented in response to the new report.
"This government is listening and taking decisive action to create an economic environment that allows businesses to plan, invest and grow."
Christopher Breen, CEBR's head of economic insight, has highlighted worsening issues with late payments over the past three years.
"While payment times are falling slightly, it's not enough to offset the rising value of overdue invoices," said Breen.
"With the average late invoice now comparable to the typical cash a small business holds, this issue is withholding capital that could be used to invest or build resilience."
Growth depends on technology
The Federation of Small Businesses and Enterprise Nation are among industry bodies urging the government to expedite digital strategies to cut late payments by up to 20%.
Business leaders have informed parliamentarians that adopting artificial intelligence for spotting invoice errors and implementing e-invoicing could significantly boost º£½ÇÊÓƵ growth.
Derk Bleeker, Sage's chief commercial officer, emphasised that the adoption of further technology could drastically cut costs as administrative time would decrease.
"It's clear that too many small businesses continue to be held back by outdated systems and slow payments, but this is a fixable problem," Bleeker stated.
