New research has revealed that £18.6billion is owed to the UK’s small-to-medium sized enterprises (SMEs) because of late payments. This is an increase of £2.6billion on the previous year. The research was commissioned by Bacs Payment Schemes Ltd, the company behind Direct Debit and Bacs Direct Credit.
When asked, as part of Bacs’s annual business omnibus, SME owners from around the country claimed that fewer of them were experiencing late payment problems than a year ago (59 per cent in 2006 compared with 51 per cent in the present research). Further examination from Bacs, however, about the value of outstanding money revealed figures that showed the average amount owed to an SME at any one time is £30,000 - an alarming figure considering that almost a third (29 per cent) of those surveyed claimed they could go bust if faced with overdue invoices of up to £20.000.
The non-profit making industry body behind Direct Debit and Bacs Direct Credit also found that almost a fifth of SMEs (19 per cent) now employ somebody with the sole responsibility of chasing late payments. This in itself loses 17 working days. Figures also revealed clear regional differences. SMEs in the Greater London area fared far worse their counterparts in other areas.
They are the most likely to experience a problem with late payments (65 per cent against the national average of 51 per cent), and are owed an average of £51,000 at any one time - £21,000 greater than the national average. They also spent an average of 38 days chasing late payments, more than double the time spent by companies in any other region.
SMEs in the North East are the least likely to experience problems (42 per cent against the national average). North West SMEs have the best results when it comes to overdue invoices. They spend just 12 days chasing guilty suppliers and 45 per cent said they experienced late payments from time to time.
