Late payment increases for SMEs post-Brexit
Fear over Brexit is putting pressure on SME construction companies, increasing late payments in the sector, with late payment as a whole in 2016 reaching nearly £23bn.
In a YouGov poll commissioned by peer-to-peer financial services company Crossflow Payments, 9% of construction SMEs said they had already experienced an increase in late payments since the EU Referendum in June 2016.
A quarter (27%) expressed concern at the potential impact of Brexit negotiations on their business over the next 12 months, with a further 13% worried about currency fluctuations.
Overall, the research found that 15.4% of the annual turnover of construction SMEs was subject to late payment in 2016, equivalent to an estimated £22.6bn for the sector as a whole.
A quarter of companies surveyed said they regularly received payment late, with nearly half reporting that they regularly received payments more than 10 days late. This is holding back investment and growth in the construction sector, Crossflow says.
More than a fifth (21%) of construction SMEs surveyed said that prompt payment would result in increased marketing and sales budgets, 21% said they would hire more staff and 18% said they would increase the wages of existing staff.
Crossflow Payments chief executive, Tony Duggan, said: “Delays in receiving payment promptly from customers is acting as handbrake on small construction businesses, preventing them from making key investment decisions for the future, and ultimately stunting growth. In 2017, it should no longer be the case that businesses face such hurdles.”
Progressclaim.com, a claim software company for the construction industry also recently produced a new eGuide, 'Duty to report on payment practices and performance - how does this affect your business?'