Octempo:RM News


Late payments to SMEs reach all-time high at GBP33.6 billion

30 November 2011

			Late payments to SMEs reach all-time high at GBP33.6 billion

The worst offenders for paying late are large companies which are behind 48 per cent of SME late payment debt, research finds.

The amount owed to UK small and medium-sized businesses in late payments has reached an all-time high of £33.6 billion since the first late payments survey in September 2007, according new research.

As well as the overall figure being up on the same point 12 months ago when it stood at £30.4 billion, the new data by Bacs also reveals the average overdue amount outstanding to SMEs is a record £39,000 and they are having to wait even longer to be paid than last year.

In total, half of all UK SMEs (861,000 firms across the country) are currently experiencing late payments from customers with business owners saying they are waiting on average 28 days more than the original payment terms to have their invoices settled. As the majority of businesses work to a 30-day payment term, many are now waiting at least two months to get paid.


The worst offenders for paying late, according to the research, are large companies which are behind 48 per cent of SME late payment debt, followed by public/private companies at 20 per cent.

Government and not-for-profit are among the best payers, with just nine per cent of SMEs experiencing overdue payments from this quarter. The hardest hit sector is retail and distribution which is owed £16.6billion.


While late payment is understandably putting a strain on cash flow, it is also increasing stress levels of the business owner as one in nine (11 per cent) reports that waiting for important payments makes them ‘very worried’ and leads to constantly checking to see if they have been paid. A further 13 per cent are worried about the consequences that late payment will have on their business.

Mike Hutchinson, Bacs: "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, but instead they are hanging on for payments which could have a serious impact on their business if they are continually late.

"As our research shows this issue not only hits the business but owners are reporting how it puts them under great stress personally, which has further negative repercussions. We urge SMEs to look at how many of the payments they are waiting for can be automated to help them assert more control over their cash flow, and hopefully alleviate some of that stress on the business and its owner."

Commenting on the report Ed Van Den Berg, Octempo Operations Director said: “We are certainly seeing more companies coming to us for help. Margins are increasingly tight and businesses simply cannot stand a bad debt write off of 1% anymore. Last month a study by Experian found the average late payment for all UK firms increased by almost a day in the third quarter of 2011 to 26.13 days so I don’t see the situation improving any time soon. Businesses need to protect themselves against this increasing risk through better credit control processes.

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