Greater than 4 in ten (43 per cent) small- and medium-sized enterprises (SMEs) are taking greater than 90 days to pay contract workers.
The variety of companies paying contract workers late has risen by 40 per cent, year-on-year, within the newest signal of the funding disaster hitting the small enterprise sector.
In accordance with new analysis from embedded finance supplier Sonovate, 63 per cent of SMEs stated that late funds from shoppers or clients have had a adverse knock-on impression on their potential to pay contract employees on time.
Final yr, simply half (50 per cent) of SMEs stated that late funds impacted their potential to pay contractors on time.
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“Whether or not it’s the intensification of the ‘value of doing enterprise’ disaster we’ve seen prior to now yr, or incumbent lenders’ persistently insufficient service to the SME sector, we’re nonetheless experiencing chaotic money move ripples throughout the financial system,” stated Richard Prime, co-founder and co-chief govt of Sonovate.
“It’s the UK’s rising military of contractors that’s more and more going through the brunt of this, having to attend over 3 times so long as they need to should receives a commission for the companies they supply. This should change, and shortly.”
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Mainstream lenders have been pulling again their funding over the previous yr in response to rising rates of interest. Nonetheless, many peer-to-peer lenders and different various financing platforms have stepped in to supply aggressive charges to creditworthy debtors.
Sonovate’s Prime famous that SME debtors have altering wants within the present financial setting, requiring “fast choices, same-day finance or timesheet and workflow automation”.
Learn extra: Irish SMEs eschew banks in favour of P2P loans