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Overdue payments for UK SMEs exceed £35 billion

Published on Friday, June 08, 2012

New research carried out by Bacs found that outstanding debts to UK Small and Medium-sized Enterprises (SMEs) reached an astonishing £35.3 billion in the first half of 2012 – an increase of almost £2 billion on research from 6 months previously.

It was also discovered that the average amount owed to SMEs at the end of 2011 stood at £45,000 (up from £39,000 earlier in the year), despite the number of SMEs reporting late payment falling (down to 785,000 from
861,000).

Bigger organisations are the least likely to pay on time, with 41% of SMEs stating that they are the 'worst offenders' compared to private companies, individuals, other SMEs and governmental departments.

Mike Hutchinson, Bacs, comments, "Our research highlights the challenges faced by thousands of SMEs chasing payments from customers and maintaining a healthy cash flow which is the life blood of any successful business".

Larger businesses need to fully understand the impact they have on suppliers, and the rest of the supply chain, when they pay suppliers past the agreed payment terms. Automating supplier payments maintains control and
"reduces stress and the financial cost of chasing payments for business owners."

Hutchinson concludes, "Ultimately it is an issue for businesses of all sizes to address. Prompt payment is good not only for the individual businesses involved in any given transaction, but throughout the whole supply chain."

Philip King, Institute of Credit Management, comments, "Although disappointing, it is no surprise that the volume and value of late payments is rising" due to the economic climate and "larger companies must do more to pay their suppliers on time."