The law firm, which works closely with hundreds of SMEs, conducted the research in order to discover the extent of the problem concerning cash flow in UK businesses. Indeed, latest figures from Bacs Payment Schemes showed that SMEs across the country are facing a £8.2bn annual shortfall as a direct result of unpaid invoices.
MLP Law's research revealed that 64 per cent of businesses surveyed suffer late payments which cost them upto £15,000 a year, while four per cent were facing shortfalls of over £50,000 every year. Almost half of respondents cited they face the issue at least once a month and 52 per cent said they write five to 10 invoices off annually as a 'bad job'.
Some of the most common consequences of unpaid invoices were cited as cash flow issues (84 per cent), being unable to pay employees and suppliers (36 per cent), stunted business growth (12 per cent), loss of time and resources (58 per cent) and strained relationships with suppliers (21 per cent).
Worryingly, many businesses don't know how to tackle issues surrounding cash flow and are not seeking legal advice. 68 per cent of these businesses didn’t seek legal advice predominantly because they thought it would cost too much (48 per cent), didn't have time (34 per cent), didn’t see the value (21 per cent), and didn’t know where to start when seeking help (12 per cent).
Commenting on the findings Tristan Duncan, partner at MLP Law, said: "The old 'cash is king' notion couldn’t ring truer here. SMEs are the backbone of the UK's economy and cash flow is clearly a huge issue for them. A healthy cash flow is the key to a successful business and when it slows, businesses can fail. While there is legislation in place which actually helps businesses to be paid on time, sadly many SMEs still face huge problems when trying to reclaim what is rightfully theirs, especially from large corporates."
For more information about MLP Law, please visit www.mlplaw.co.uk or call 0845 0738 445.
