Late Payments Impact on UK SMEs
New research from Bacs has revealed that over half of the UK’s small businesses do not expect any assistance from the Government when it comes to dealing with late payments.
Bacs, the organisation behind the Bacs Direct Credit payment system, said that the 56% of SMEs are not expecting any help whilst the number of small businesses feeling the impact of late payments (in June 2010) has fallen by as much as 20% in 6 months.
Believing that the change in fortunes is down to individual companies’ efforts to "tighten belts", Mike Hutchinson, head of marketing at Bacs says:
“It’s extremely heartening to see that there are now many companies making great strides to help themselves beat the late payments cycle, by sharpening up their billing and credit control procedures.”
On the negative side there are, however, a massive number of small businesses still affected by late payments and the research by Bacs shows that the total amount of money owed is up 28% against figures six months ago. 769,000 SMEs are affected by late payments and the average owed is up from £25,000 in December 2009 to £32,000 in June 2010. The total amount owed to small businesses across Britain is an estimated £24.6bn.
Mike Hutchinson continues:
“There is valuable help and advice available, through schemes like the Prompt Payment Code, for companies still suffering from late payments and SMEs will be well served to draw on all available resources to find new routes forward.”
With many UK SMEs still dependent on the good old chequebook for payment (79% of SMEs still use cheques to pay their bills), Bacs suggest that small firms should consider adopting automated payment methods. Cheque clearing facilities are due to phased out by 2018 so it might be wise to adopt the practice sooner rather than later.
“Automated payments offer many benefits in streamlining processes and helping cash flow, which companies can take advantage of now to help combat late payments.”
For more information see the Bacs report Late payments impact on GB SMEs Statistics by region (565k PDF), read the business advice article on late payment or visit www.paymedirect.co.uk