Tuesday 21st July, 2015

According to research by Bacs Payment Schemes Ltd, hard pressed UK small to medium size enterprises (SMEs) are facing higher costs than ever in chasing late payment debt.

Research into the UKs late payment burden shows that SMEs are racking up a collective £10.8 billion a year in their attempts to recover overdue payments – that’s an average of balmost £11,500 each, or £955 a month. Compared with the total cost in July last year was £8.2 billion.

But that’s countered by good news that the overall late payment debt appears to have peaked, and is now on its way down – Bacs’ research shows that the total amount owed to both large and small UK businesses now stands at £31.3 billion, down from £41.5 billion this time last year.

A huge 80 per cent of all companies which experience late payments say they are being kept waiting one month or longer beyond their agreed terms before receiving payment. About a quarter admit that late payments are forcing them to rely on bank overdrafts and a similar number say that late payments are forcing them to pay their own suppliers late.

When it comes to government initiatives to curb late payments, about a quarter (24 per cent) say they are aware of measures to oblige large and listed companies to publish payment practices. However, some three quarters (76 per cent) don’t feel these measures could improve the speed their companies are paid.

Mike Hutchinson from Bacs said: "Our figures show that while the late payment landscape is improving in terms of the totals owed, it is at a cost, and a very real one, with SMEs having to dip into their pockets to chase money they are owed. We urge businesses to look at automated payments like Direct Debit to reduce the time and money that companies are spending to recover payments due to them."