Times are already hard for Small and Medium-sized Enterprises (SMEs), with the struggling economy. But to add insult to injury, they are owed a total of £33.6 billion from their customers in late payments.
The research carried out by Bacs, shows that the figure has risen by 10 per cent in the last year, and is the highest figure recorded since 2007.
Speaking of the issue, Mike Hutchinson, Head of Marketing at Bacs, expressed: “The issue of late payment is continuing to get worse for SMEs in the UK at a time when they need to be able to plan ahead for growth and ensure a strong cash flow.”
“This issue not only hits the business but owners are reporting how it puts them under great stress personally, which has further negative repercussions,” Mr Hutchinson added.
Based on a sample of 861,000 SMEs, the average amount owed is £39,000. The worst payers are customers of larger organisations, which make up 48 per cent in late payments, with public/private organisations making up 20 per cent of the debt. So why are people paying late?
The main excuse that was given was that the payment was help-up by their internal systems. People would go on to say that the invoice is either waiting for authorisation or is currently with their accounts department.
Retail commercial properties and distributers are the hardest hit sector, which is owed a whopping £16.6 billion in payments. However, the sectors with the least amount of debt are not-for-profit organisations and government bodies who make up only 9 per cent of owed payments.
According to Experian; from July to September of this year, late payment times increased from one day to 26.13 days.
