New research from the UK’s leading insurance premium finance company, Premium Credit, shows SMEs are continuing to suffer as late payments of invoices become a bigger issue.
Up to 28% of firms questioned say late payment problems have worsened in the past year with 7% saying the problem has become much worse. Just 3% say the issue has eased and 50% said there had been no change.
That is higher than when Premium Credit’s Insurance Index, which monitors insurance buying and how it is financed, reported on the issue last year. Research then found 24% of SME owners and managers said payment delays had worsened in the previous 12 months with 5% saying they had become much worse.
Problems securing credit are adding to their worries. Around one in six (17%) say they have struggled to access credit since the cost of living crisis hit which compares to 13% who reported problems in last year’s Insurance Index.
Research shows SMEs are also grappling with worries about how to fund rising wage and salary demands. Around 27% of firms questioned said wage inflation will be an issue in the year ahead while one in twelve (8%) have told staff they cannot afford to raise wages. Around one in three (34%) say they have already boosted wages and salaries.
Rising energy bills are adding to the pressure – around one in seven (14%) of SMEs questioned plan to cut running costs including wages in the year ahead so they can afford energy bills while 7% say they will cut staff. Firms are however most likely to raise prices for customers with 23% planning to do so.
Owen Thomas, Chief Sales Officer at Premium Credit, said: “Late payment of invoices is a growing issue for SMEs and our research shows the problem is becoming bigger with a major impact on cashflow and business operations.”
“Premium finance is a very cost-effective way for businesses to buy insurance, and better manage their finances and cashflow by spreading payments. Our research shows more than half of SMEs use some form of credit to ensure they can still afford business-critical insurance.”
Premium finance companies like Premium Credit provide businesses and consumers with the ability to use a loan to pay for their insurance in monthly instalments. By managing insurance payments in this way, businesses and consumers can spread the cost of their insurance, rather than pay their premiums in one lump sum.