Increasing numbers of print SMEs are being placed under undue pressure as a result of late payments from customers, as the Federation of Small Businesses (FSB) calls on the government to crack down on the late payment culture.
FSB national chairman Mike Cherry said in his new year message that 5.7 million SMEs and self-employed individuals are affected by this issue across all industries, with an estimated £18bn held up in poor or late payments.
According to figures from the BPIF, late payments have quickly risen to be one of the biggest concerns among print businesses in the UK. In its Printing Outlook for the fourth quarter of 2017, the BPIF found that the proportion of UK printers concerned about late payments had risen from 16% in Q3 to 32% in Q4.
BPIF research and information manager Kyle Jardine warned of the negative impact late payments have on the cashflow of print SMEs.
He said: “Businesses have bills to pay and the costs are rising. If a company is operating on really tight margins, something as simple as a delayed payment can be enough to break a business. It can be the difference between what is expected and what actually happens.
“Firms can do their best to avoid impacts by managing their costings and scheduling things to make room for payments they expect to come in late. But it is those unexpectedly late ones that have the impact.
“Some companies transfer their big costs for jobs directly to the customer, such as having them buy the paper upfront rather than paying for all resources after the job is complete – though this is often only possible when dealing with larger runs and bigger clients.”
In an earlier survey from Q2 of last year, the BPIF found that almost half of the printers surveyed had been forced to accept longer, renegotiated payment terms from some customers in the prior 12 months. With more than 65% of the renegotiated payment terms being for up to 90 days and 17% even longer.
KCS Print managing director Terrye Teverson said larger companies were often the “biggest culprits” of these unexpected revisions to initial contracts.
“Companies are fearful of putting their foot down and saying no to these kinds of requests in case they lose the business,” she said. “We are quite fussy about who we deal with and try to make a point of sticking to agreed-upon terms when we draw up contracts.
“But many firms do not feel like they can do this and so bigger customers using this as a form of blackmail to get delays on payments essentially use SMEs like bankers by holding onto the money they owe until a job is over.
“It causes serious cashflow problems and has seen a swathe of businesses go under. The deal is not done until the money is in the bank, which is something everyone has to keep in mind when doing these deals.”
Teverson, whose Launceston-based firm was highly commended in the PrintWeek Awards’ SME of the Year 2017 category, said that every company would have to change the way it traded with customers at once to see a culture change.
The BPIF said the government can help SMEs deal with delayed payments from public sector bodies by making all public agencies pay SME invoices within 30 days and enforcing compliance, and by ensuring the Small Business Commissioner “tackles late payment culture as a priority”.