Late payment is costing UK’s SMEs £11bn a year
Small and medium-sized enterprises (SMEs) in the UK are spending up to £11 billion a year on chasing late payments from suppliers, according to data from Bacs, the UK direct debit company. This figure has risen from £8.2bn in July 2014.
While the total owed in late payments (to all UK companies) has fallen from £41.5 billion to £31.3 billion since this time last year, the burden on companies with fewer than 250 employees remains high. SMEs are owed a total of £26.8 billion in late payments, down from £32.4 billion in July of last year.
A statement from Bacs read: “Research into the UK's late payment burden shows that SMEs are racking up a collective £10.8 billion a year in their attempts to recover overdue payments – that’s an average of almost £11,500 each, or £955 a month.”
Bacs also reported that a huge 80 per cent of all companies that experience late payments say they are being kept waiting one month or more beyond their agreed terms before receiving payment.
About a quarter admit that late payments are forcing them to rely on bank overdrafts (24 per cent) and a similar number say that late payments are forcing them to pay their own suppliers late (26 per cent).
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