Late payers owe SMEs nearly £55 billion
Late payments to businesses in the UK have more than doubled since the summer of 2013, with SMEs now owed almost £55 billion.
It means unpaid or outstanding invoices have leapt by 52% in a little over seven months, which is having an adverse affect on businesses as they look to expand.
This is despite government interference into the matter when a series of recommendations were made to support trade unions following a public inquiry last August.
The shadow Cabinet Office minister Michael Dugher followed that up in November by urging further action, but it seems to be having little impact.
According to Sage Pay, the average business is now owed £11,358, with one in five SMEs having £30,000 in outstanding payments owed to them.
In the research, the company found that 67% of businesses were still using paper invoices and that they were spending almost two weeks of every year chasing unpaid bills.
Slow progress from 2013
One recommendation in 2013 was for late payers to be fined, while the issue was highlighted back in September as being one that needed immediate consideration.
While fines could be deemed excessive – and are not yet being implemented – it could be a way of overcoming the issues associated with late payments.
In the worst case scenario, the lack of finance can require administrative or corporate recovery methods, although careful cash flow management can alleviate some of these issues.
Late payments are especially an issue for very small companies, where they do not have the available staff to chase those payments.
The biggest issues surrounding late payments concern the management of the business cash flow, where credit deals are constantly being struck to cover any due payments.
In instances where businesses are unsure if and how late payments could affect them, guidance is available on the most common issues.
By Phil Smith