Late Payments to SMEs Continue
Regular reports in the is4profit small business news section show that late payments to SMEs are continuing to rise.
Less than a year ago, in November 2011, UK small businesses were owed a record £33.6 billion in overdue payments.
By July of this year that figure had risen again to £35.3 billion.
The latest figures, from Bacs, show that over a million UK Small businesses are currently subject to late payments and that the total outstanding money owed now amounts to £36.4 billion.
In just over a year the average debt to individual small businesses has also leapt, up from £27,000 in the middle of 2011 to £36,000 today. That alone is an increase of around 33%
Big companies have been identified as some of the worst late payment offenders and the Forum of Private Business (FPB) put its own findings to the Government earlier this year in an attempt to curb the habit of late payment.
The "Be Fair, Pay On Time" campaign was launched to persuade FTSE companies to sign up to the Prompt Payment Code and, whilst 75 of the FTSE 100 companies were approached, only ten signed up to the code.
At the same time, the Be Fair — Pay on Time campaign only managed to persuade ten FTSE companies to sign up to the Prompt Payment Code when it recently targeted the top 75 of the FTSE 100 companies.
The Federation of Small Businesses‘ (FSB) national chairman, John Walker, praised the ten companies, saying:
"It is good news that ten of the biggest companies in the UK have signed up to the campaign. We now need to see more following their example. It just isn’t fair that small firms struggle because bigger businesses take too long to pay. I want to see all big businesses committing to being fair and paying on time."
The ten signatories wereBG Energy Holdings, BHP Billiton, Land Securities Properties, Reckitt Benckiser, Royal Dutch Shell, Serco, Severn Trent, Standard Life, Tullow Group and Vodafone.
Five FTSE 100 refused to sign up and the other 60 businesses failed to even respond.
Chuka Umunna, the Labour MP for Streatham and shadow business secretary, who originally sat in on the Late Payments (SMEs) motion said:
"Late payment is a huge and growing problem for our small and medium-sized businesses. It is fantastic that as a result of the campaign 10 more large firms are now signed up to the prompt payment code. We want even more companies to follow their lead. There is no excuse for not paying on time, which has led to too many small companies going under."
The figures from Bacs support this concern with 35% of the small and medium-sized businesses it questioned responding that late payments to the tune of just £20,000 would be enough to "drive them to the wall".
Data from the FSB last year showed that 56% of their members had written off debts of up to £10,000 due to late payment and, in the construction industry, invoices over £35,000 were being written off.
Whilst big firms were the worst late payers, SMEs themselves were runners up with Government and non-profits being "the best" of the worst.
As well as the experience of late payment of substantial amounts of invoices, small businesses were being forced to wait, on average, more than 43 days for dues to be paid.