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"Late payments are a scourge and it shouldn't be left to SMEs to fund the cashflow of massive entities"

ended 19. September 2024

Newspage asked a selection of busines owners from different sectors about how late payments impact them and who tend to be the biggest culprits. They singled out bigger corporates and the NHS.

One, Sam Kirk, Managing Director at J-Flex Rubber Products commented: "In our experience, it tends to be the bigger, corporate-type organisations that use lucrative supply agreeements to dictate payment terms, and often smaller businesses won't attempt to negotiate them for fear of upsetting the client and potentially losing the opportunity. SMEs are constantly told they are the "backbone of the economy", and if the Government had a similar backbone, they'd tackle this issue sooner rather than later. Late payments are a scourge and it shouldn't be left to SMEs to fund the cashflow of massive entities. However, that, sadly, is the reality and it leaves many SMEs on the brink."

Another Sam Alsop-Hall, Chief Strategy Officer at Woodrow Mercer Healthcare, added: “Late payments have become a significant challenge for our business as an NHS supplier. With NHS trusts struggling to meet their financial obligations due to stricter cash support controls imposed by NHS England, the knock-on effect is that suppliers like us are often left waiting far beyond the 30-day payment target. One trust is only paying a third of invoices on time, which falls well short of the 95% target. This puts an immense strain on our cash flow, forcing us to reconsider growth and hiring plans. When payments are delayed, it not only impacts our ability to maintain day-to-day operations but also limits our capacity to invest in capital projects and expand our services. Bring back the days when the NHS was seen as “safe as houses” or “crown capital”. These days, even the bank are twitchy about giving us credit against them. If we go pop it will be because of cash and no other reason.”

The views of five SME owners are below.

5 responses from the Newspage community

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Sam Alsop-Hall
Chief Strategy Officer at Clive Henry Group
Late payments have become a significant challenge for our business as an NHS supplier. With NHS trusts struggling to meet their financial obligations due to stricter cash support controls imposed by NHS England, the knock-on effect is that suppliers like us are often left waiting far beyond the 30-day payment target. One trust is only paying a third of invoices on time, which falls well short of the 95% target. This puts an immense strain on our cash flow, forcing us to reconsider growth and hiring plans. When payments are delayed, it not only impacts our ability to maintain day-to-day operations but also limits our capacity to invest in capital projects and expand our services. Bring back the days when the NHS was seen as “safe as houses” or “crown capital”. These days, even the bank are twitchy about giving us credit against them. If we go pop it will be because of cash and no other reason.
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Sam Kirk
Managing Director at J-Flex Rubber Products
In our experience, it tends to be the bigger, corporate-type organisations that use lucrative supply agreeements to dictate payment terms, and often smaller businesses won't attempt to negotiate them for fear of upsetting the client and potentially losing the opportunity. SMEs are constantly told they are the "backbone of the economy", and if the Government had a similar backbone, they'd tackle this issue sooner rather than later. Late payments are a scourge and it shouldn't be left to SMEs to fund the cashflow of massive entities. However, that, sadly, is the reality and it leaves many SMEs on the brink.
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Hannah Swierstra
Owner at Hannah Swierstra
I support a number of small businesses who get work through procurement. It's often the public sector that are the hardest to get prompt payment from. There is often a laborious approval process and it's easy for invoices to get lost between departments. A couple of years ago, an NHS trust was five months late paying their bill as we weren't given the correct invoicing information to start with. It took months of tooing and froing to get the correct information and finally get the bill settled.
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Rachel Hayward
MD at Ask the Chameleon
I absolutely abhor late payers. It's bad for business, disrespectful and kills our livelihoods. Often the largest companies are the worst culprits, and despite the valiant attempts of the Small Business Commissioner & the Prompt Payment Code, they can often still secure government contracts despite their poor track record. You wouldn't leave a shop without paying. Why are we any different?
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Samantha Acton
Director at Domestic Angels
Currently the biggest late payment offenders are state- and government-run institutions, namely councils and the NHS. This is because cumbersome procurement processes have been adopted that SMEs find costly and difficult to navigate. The upshot is that suppliers to these institutions tend to be larger organisations and not local suppliers. The only way we can sensibly provide to such institutions is to pass the delayed payment and additional administration costs to the institution via inflated charges. This is annoying as this contributes to unnecessary increased costs, which ultimately are paid for by our taxes.