Reading Time | < 1 min

Late payment still plagues smaller firms

Share this article

Unsettled bills continue to prove a major headache for many smaller firms, according to new research.

Bacs, the organisation that runs the direct debits system, has said that more than a half (53 per cent) of the UK’s SMEs have suffered delays in payment. That represents a rise of 8 per cent on the corresponding figure for a year ago.

In total, SMEs are owed some £24 billion. The average of outstanding payments per firm has now reached £27,000.

When SME invoices are finally paid, many will have had to wait 39 days beyond the time-frame agreed in their payment terms and conditions. That is an increase of almost eight days since 2009.

The finger of blame is pointed most directly at large companies that fail to settle invoices on time. Almost a third of big corporations are late in sending off payments, the research suggested.

To make matters worse, small businesses have been investing up to half a day per week hunting down outstanding invoices, the equivalent to 158 million hours a year in work time.

Mike Hutchinson, head of marketing at Bacs, said: “Late payment remains a big problem for British SMEs with £billions overdue against bills, causing small businesses to use up millions of man hours in chasing invoice payment.

“Cash flow is an essential business priority, particularly in a period of economic uncertainty, and we urge SMEs to consider turning to automated payments wherever they can to manage the money which is under their control.”