SMEs owed £26.3bn in unpaid invoices
ALMOST half of small- and medium-sized enterprises (SMEs) suffer from late payments, with UK firms owed £26.3bn in unpaid debt, according to a survey.
Research by payment services company Bacs found 47 per cent of SMEs have customers who flout agreed payment terms, leaving firms out of pocket by an average of £32,185.
A third of SMEs said these delays meant they had to hold off paying their own suppliers, while 12 per cent had trouble paying their own staff.
Read more: 60 per cent of SME invoices paid late
Commenting on the figures, Kelly Mills, partner at law firm DMH Stallard, expressed hope that new laws being introduced tomorrow – compelling large companies to publicly report their average payment times – should address the problem.
“Being paid promptly for many of these SMEs can be the difference between thriving and dying,” she said.
“It’s tough enough to run a successful business without having to spend inordinate amounts of time also chasing customers for payment.
“The new rules brought in by the government are to be welcomed and will hopefully bring a positive change to the way SMEs are paid.”
She said businesses could protect themselves to ensure prompt payment by credit checking customers, agreeing clear terms, invoicing promptly and chasing debt.
“While many businesses recognise that the practice of late payments is ethically unsound, SMEs can also help combat the problem by using best practice in managing their payment systems,” Mills added.
“It won’t prevent every late payment or bad debt, but by establishing strong protocols for how a business administers its financial relationships, cash flow will improve and the resources needed to chase outstanding bills will be greatly reduced.”