65% rise in small businesses reporting late payments
An investigation by Bacs Payment Schemes Limited has shown that over 1 million UK small businesses are facing potential financial difficulty as a result of late payments. The number of small businesses reporting late payments rise by 65% this year, when compared to 2008.
Collectively, the report states that SMEs are owed a massive ┬ú30.4 billion, and Bacs reported that the figure owed today was up more than ┬ú11 billion when compared to 2007. Businesses in the Midlands were the worst affected, facing late payment bills of ┬ú12.6 billion, up by 29% on 2008.
However on a slightly more positive note, research shows that the average owed to individual SMEs has fallen over the past year, from ┬ú38,000 in 2008 to ┬ú28,000 in 2009.
Michael Chambers, managing director of Bacs said:
“The average amount outstanding might have gone down but there are many, many more companies finding themselves with overdue invoices accounting for large amounts of cash which isnΓÇÖt flowing into the business as it should be.
While many businesses which owe money to others do undoubtedly have problems in paying bills quickly, there is a question mark over those who may be ‘playing’ the system and delaying payment for as long as they can.”
The report sheds light on the potential snowball effect late payments can have on the small business world. Bacs state that 52% of SMEs surveyed agreed that if theyΓÇÖre paid late, they’ll pay their invoices later too.
Michael Chambers said:
“With over half of all SMEs saying that if their invoices are paid late it means they have to delay payment to other organisations, we must actively work to break this cycle of late payments to help businesses survive through these challenging times.
We encourage SMEs who are experiencing late payment difficulties to visit www.paymedirect.co.uk for guidance and advice on avoiding payment problems. It is time that the wider business community pulled together to lever itself out of this damaging cycle.”
To get help and advice in relation to late payments and cash flow, go to: www.paymedirect.co.uk.
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