Research reveals late payment issues are easing for SMEs
New research from the UK’s leading insurance premium finance company, Premium Credit, shows late payment issues are easing for SMEs but still remain a concern.
Its Insurance Index, which monitors insurance buying and how it is financed, found one in five (20%) of firms reporting a growing problem with late payment of bills with 5% warning the issue has become much worse.
That is substantially down on the 28% of firms saying late payment problems had worsened in the past 12 months which included 7% saying it had become much worse when the Insurance Index last reported.2 It is also lower than the 24% saying payment delays had worsened in the previous 12 months in the 2022 Insurance Index3 .
More than half (52%) of SME owners and managers questioned this year say the late payment issue has remained the same for them in the past 12 months which compares with 50% last year.
One method being used to manage cashflow at SMEs identified by the study is a growing switch to paying for insurance monthly instead of in a one-off payment. Around 15% of SMEs have switched to monthly payments for insurance compared with 11% who have switched to paying in a lump sum.
SMEs have also run down savings with 28% saying the amount of savings they have has fallen since the start of the cost of living crisis including 9% who say their cash savings have dropped dramatically. Around one in five (20%) have increased savings over the same period.
Owen Thomas, chief sales officer at Premium Credit, said: “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.
“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.”
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.