Small businesses owed over £40bn in late payments, as Labour leader Jeremy Corbyn slams larger firms for not playing fair

 
Hayley Kirton
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Almost two-thirds of small businesses believe late payments are causing some firms to close down (Source: Getty)

More than half (52 per cent) of Britain's smallest businesses are owed £44.6bn in late payments between them, research out today warns, just as Jeremy Corbyn has vowed to declare "war" on larger firms who make late payments to their suppliers.

The survey by Zurich of more than 1,000 small-and-medium sized business owners discovered more than a fifth (21 per cent) are currently owed more than £25,000, while just shy of one in 10 (nine per cent) are owed more than £100,000.

Almost half (45 per cent) said they had typically been left waiting up to three months for money they were due, while 14 per cent said it was not unheard of for them to be waiting up to six months.

Read more: Companies to be on the hook to reveal details of how they pay suppliers

Almost two-thirds (65 per cent) added they thought late payments were pushing some businesses to breaking point and causing them to close their doors. Nearly a quarter (24 per cent) revealed late payments had caused them to dip into their overdraft in the past.

"On an individual basis, many small businesses are owed hundreds of thousands of pounds," said Paul Tombs, head of small and medium enterprises proposition at Zurich. "In an environment where cash flow is key to small business survival, the situation is simply unsustainable.

"It is imperative that small business owners receive the support and guidance required and fair access to the funds that they are owed to secure the future of their businesses."

Read more: Here's where workers go to be productive. Hint: It's not the office

Speaking at the Federation of Small Businesses today, Corbyn accused larger businesses of using smaller players as a source of interest-free capital and put forward a new systems of fines for persistent late payers.

“Some of the biggest names in business are holding cash piles that don’t actually belong to them. It’s a national scandal,” the Labour leader said.

However, a number of firms Corbyn called out, including M&S, BT, Vodafone and Capita, disputed the claims and some of the numbers he had put forward.

Read more: The cost of running a firm in London is starting to outweigh the benefits

Just last week, a new set of regulations came into force which require large companies and limited liability partnerships to report twice a year on their payment policies and performance, including the average time taken to pay invoices.

Under the Reporting on Payment Practices and Performance Regulations, both the company and the directors can be held criminally responsible for failing to publish this information or publishing information that is false or misleading.

The regulations are part of a package of measures announced by the government earlier this year to help small businesses. The Department of Business, Energy and Industrial Strategy is also looking for the UK’s first small business commissioner, who will advocate for small businesses and support them in payment disputes with bigger clients.

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