By Daniel Hunter

Business owners are seeing their cashflow, and their patience, tested to the limit by late-paying clients, according to new research by the alternative finance provider Platform Black.

The survey of hundreds of SMEs reveals both the scale and the impact of late payments on Britain’s businesses.

Nearly two thirds (65%) of those polled said that their clients are taking longer to pay their invoices than they did a year ago.

A third (33%) said that at least half of their clients routinely pay their debts late.

But most damning of all is the extent to which late-paying clients are stretching payment terms. More than three quarters (78%) of late-payers were found to pay more than 10 days late — with three out of 10 (31%) paying more than a month late.

Respondents’ comments confirm the bleak picture painted by the data, with one SME owner writing: “Clients now see it as their right to pay late. This cripples cashflow and damages our confidence. We work in constant fear of taking a big hit.”

Platform Black helps SMEs keep on top of their cashflow by allowing them to auction their unpaid invoices online — giving them quick and easy access to outstanding funds.

With many high street banks still unable or unwilling to lend to business, Platform Black’s alternative finance model has grown exponentially since it launched last June. By December it had advanced £1 million in a single week to British businesses.

“Our research confirms what many businesses have long suspected — that growing numbers of SMEs risk falling into a double-pronged liquidity trap," Platform Black CEO Christopher Shaw said.

“Five years after the credit crunch first hit, banks are still withdrawing many SMEs’ overdraft facilities, while the lack of overall liquidity has trickled down industry to cause an epidemic of late payment.

“Even vibrant companies with a strong order book are being stretched to breaking point by a perfect storm of late-paying clients and banks that are reluctant to offer credit.

“As a result alternative sources of finance have moved from the exotic to the essential.

"As the right solution at the right time, invoice trading has truly come of age. It’s a simple and economic way for businesses to access funds that would otherwise be tied up in unpaid invoices.

“The banks will still play a major role, but the genie is out of the bottle and many businesses have now discovered that there are cheaper and more flexible sources of finance.”

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