Smaller firms still being affected by late payments
Many small firms are having to wait longer to get paid, new research has shown.
On average, SMEs are waiting 41 days longer than their original agreed payment terms before invoices are being settled.
Compared with June of last year, the figure, which takes into account data up to December 2009, represents an increase of 9.5 days.
The study was compiled by Bacs Payment Schemes.
Large companies were cited as the main late payment culprits by 37 per cent of SMEs that took part in the survey.
However, 17 per cent of respondents blamed sole traders, while the same proportion said that other SMEs were the slowest payers.
The most commonly offered explanation for delayed payments was cash flow, with 39 per cent of SMEs saying it was the primary reason given by customers for late settlement.
But only 7 per cent of respondents said that customers blamed the economic downturn for the delay.
Some positive figures did emerge from the survey.
The total amount owed in late payments to British SMEs actually fell, down from £30.4 billion in June 2009 to £24 billion in December 2009. The average amount owed at any one time to an SME also declined from £28,000 in June 2009 to £25,000 in December 2009.
Michael Chambers, managing director of Bacs, said: “Small businesses rely on receiving payments on time so that they can maintain cash flow and ensure the business can run on a day-to-day basis. Our research highlights the continued widespread nature and real impact of the late payment problem, which was affecting 961,000 SMEs in December last year – that’s a massive 57 per cent of all British SMEs.”
Mr Chambers urged smaller firms to be proactive in improving their payment collection processes.
He commented: “Accurate, efficient and prompt invoicing, which clearly states the agreed payment terms, is a must.”