Alexander Schwendtner, Managing Director Graydon commented on Government plans to boost SME growth
Prime Minister David Cameron saluted Britain’s record rate of new business creation. One ironic positive from the on-going financial crisis is that the number of entrepreneurs setting up new small and medium sized businesses is on the rise. As unemployment rises and while we wait for the promised increase in private sector jobs, more people opt for self-employment and decide to start up on their own.
“SMEs and start-ups in particular need to remain cautious as along with thinking about their products and making sales, they need to ensure that they are getting paid on time as the reality is many will fail and fall into insolvency if they do not guard against the late payment of trade invoices. A recent study has found that one in three start-up businesses fall into insolvency within the first three years of operation.
“A poll of 500 SMEs carried out by Graydon UK earlier this year found that over 50 per cent of businesses identify the late payment of trade invoices as an issue. Sixteen per cent said they have almost been put out of business as a result. The British Chambers of Commerce last week reported that one in four small businesses have admitted that at least 40 per cent of their payments arrive late. Whilst the Government is keen to support businesses by improving their access to finance, it also needs to do more to raise awareness of the bad debts and help firms get paid on time.
“Businesses should act now and take preventative steps so they are able to recognise the threat of late payment as early on as possible. Stepping up credit control policies will allow businesses to achieve sustainable growth. Without accurate customer payment behaviour information, businesses will be unable to transact with confidence, impacting their potential to grow. With only 44 per cent of businesses having formal credit control procedures in place, there is an urgent need for SMEs and start-ups in particular to tackle this.”
Source: Graydon – a member of BIIA