UK SMEs owed almost £16 billion in late payments
An ever increasing number of small-to-medium sized enterprises (SMEs) in the UK are experiencing problems with late payments.
Figures released by Bacs today* show that more than half of SME businesses (59%) have experienced problems with delayed customer or supplier payments at some time. This number is almost double that of Bacs findings in 2004 which showed just a third of SMEs had experienced some sort of delayed payment.
Bacs research also shows that the total amount of money owed to UK SMEs is on the increase. Collectively, the average amount of money outstanding to companies with 250 employees or less has rocketed from £11 billion two years ago, to almost £16 billion (£15,994,000,000).
Michael Chambers, Managing Director of Bacs, said “The fact that UK SMEs are waiting on £16 billion is staggering and shows that the impact of late payments cannot be underestimated. Late payments now pose a considerable problem for more than half of all SMEs in Great Britain – if this figure continues to rise, the knock on effect for the UK economy could be disastrous. Business and financial managers up and down the country need to tackle late payment issues head on to safeguard the commercial interests of their organisations.”
SMEs that want to address late payment issues before they get a grip on their business have a number of helpful tools at their disposal. According to Bacs, 69% of all small business managers and 91% of financial directors in mid-to-large corporates, would either be prepared or would prefer to receive automated payments on an agreed date to help ensure funds are cleared directly into bank accounts. However, many are not taking simple steps towards encouraging payment by Direct Debit and Bacs Direct Credit. Bacs research reveals that 59% of small businesses and 38% of mid/large corporates do not even include bank account details on bills.
In a bid to encourage good working practices, Bacs is stepping up its ‘Pay Me Direct’ campaign and encouraging small business owners to ensure they include their bank account details on invoices and billing statements along with the Pay Me Direct message. The company has created a set of free materials that SMEs can download and use in correspondence with customers and suppliers. Bacs has also developed ten top tips containing advice on preventing late payments in association with The Better Payment Practice Group, as part of a joint initiative to provide expert information to businesses.
Commenting, Bill Barrott from the Better Payment Practice Group said: “Considering the dangers inherent in late payments, it is amazing how many companies do not take precautions to protect themselves. We are committed to improving the payment culture of organisations trading in the UK and have established a Better Payment Practice Code, which urges firms to adopt a responsible attitude to paying on time. Working together with organisations like Bacs we can offer expert advice and guidance to UK businesses, and help minimise the impact of problems associated with late payment.” For more information about Bacs and our services visit Bacs key facts.
Contact the Bacs press office.
Notes
* Figures were obtained as part of a Market Research Programme conducted on behalf of Bacs in June 2006. Business Research specialists, Continental Research conducted 500 business interviews with managing directors, financial directors and senior managers of UK companies. Data has been weighted to be representative of 727,000 SME’s and of 1,095,000 small businesses and 147,000 mid/large corporates in the UK
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