The growth prospects of construction SMEs are being potentially stalled due to late payments, according to research commissioned by Crossflow Payments, the Fintech platform delivering supply chain finance solutions.
The findings also come against the backdrop of the introduction (6 April 2017) of new government obligations requiring large businesses to publicly report on their payment practice to suppliers. Although this starts to quantify the problem at an individual corporate level, including whether they use supply chain finance solutions, it serves as a reminder of the need for further progress to be made in ensuring SMEs are able to receive prompt payment from customers.
Of construction SMEs surveyed, an average 15.4% of the annual turnover was subject to late payment in 2016, equivalent to an estimated £22.6 billion for the sector as a whole. Eleven of 25 of small construction companies who receive payment late for invoices admit payment is regularly late by more than ten days, and a quarter says that they receive payment for invoices late.
The findings convey the economic opportunity at stake if construction SMEs are able to boost their working capital by receiving payment for invoices quicker, with tangible business benefits identified by businesses.
Over a fifth, (21%) of construction SMEs surveyed said they would increase marketing and sales budgets, while 21% said they would hire more staff, and another 18% said they would increase the wages of existing staff.
About Crossflow Payments
Crossflow Payments is a technology-driven alternative finance platform delivering an innovative supply chain finance solution to large corporates and their suppliers. Its unique payment platform improves working capital for businesses whilst providing SMEs with instant access to finance against their outstanding invoices without the need for onerous personal guarantees.