New research from the UK insurance premium finance company, Premium Credit, reveals that while late payment issues are easing for SMEs, they remain a significant concern.
The Insurance Index, which monitors insurance purchasing and financing, found that one in five (20%) firms reported increasing problems with late payment of bills, with 5% indicating the issue has become much worse.
This is a notable decrease from the 28% of firms reporting worsening late payment problems in the past 12 months, including 7% stating it had become much worse, according to the previous Insurance Index report. It is also lower than the 24% who reported worsening payment delays in the 2022 Insurance Index.
More than half (52%) of SME owners and managers surveyed this year stated that the late payment issue had remained the same over the past 12 months, compared to 50% last year.
The study identified a growing trend among SMEs to manage cashflow by switching to monthly insurance payments rather than a single lump sum. Around 15% of SMEs have moved to monthly payments, while 11% have opted for one-off payments.
Additionally, Premium Credit found that some SMEs have depleted their savings, with 28% reporting a reduction in savings since the start of the cost-of-living crisis, including 9% who said their cash savings had dropped dramatically. About one in five (20%) have increased their savings during the same period.
Owen Thomas (pictured above), chief sales officer at Premium Credit, commented on the findings and what it means for the nation’s SMEs.
“It is encouraging to see that the issue of late payment of invoices is easing somewhat for some SMEs, but despite that, it still has a major impact on cashflow and business operations,” Thomas said.
“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 firms are switching to monthly payments for credit to buy insurance, which underlines that point,” Thomas said.
What are your thoughts on this story? Please feel free to share your comments below.
