Late Payments: Who Are the Worst Offenders
British corporates are worst offenders in £24 billion late payment debt
Government and not-for-profits pay on time
- 33% of SMEs say corporates don’t pay on time
- Payments delayed by up to 52 days
- Late payment from public and third sectors improves
- 158 million man hours lost to chasing overdue bills
- Half Britain’s SMEs fall victim to late payment
- £27,000 – average amount owed
Large corporates are responsible for many of the late payments making up the massive £24 billion owed to British small and medium sized enterprises (SMEs), according to research from Bacs, the organisation behind Direct Debit and Bacs Direct Credit.
But, in contrast with the commercial sector, the public and third sectors are meeting more of their bills on time – SMEs experiencing late payment on invoices to government and not-for-profit organisations almost halved from 11% to 6% in the last six months of 2010.
Bacs newest late payments research shows a third of SMEs reporting that big businesses are behind late bill settlement. And those operating in the manufacturing industry are most likely to suffer delay at the hands of the big corporates, where 41% of the sector’s SMEs experiencing late payment said large companies were to blame for overdue invoices.
More than half (53%) of the country’s SMEs have experienced late payment – that’s up from 45% in June 2010 – with the average owed at any one time standing at £27,000. And when SMEs do finally get paid, the length of time they’ve had to wait is an average of 39 days beyond agreed payment terms, an increase of nearly eight days since June 2009. That rises to almost 50 days within the distribution sector, while businesses in the North are waiting an average of 52 days longer than anticipated – that’s almost two months.
The burden of chasing overdue invoices is also impacting on smaller British businesses, as they’re forced to spend an average of ½ a day every week pursuing payment. That equates to more than 158 million man hours lost to the British economy just in chasing bill settlement.
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.”
For further information on late payments read about the Late Payment of Commercial Debts (Interest) Act 2002.