Late payment debts owed to the UK’s small to medium-sized enterprises (SMEs) now total £23.4 billion, according to new research from Pay.UK.
A survey conducted by Pay.UK, which runs the BACS direct credit and direct debit payment services, showed that debts due from late payments have soared by over £10 billion from the £13 billion total reported last year.
Over half of SMEs have experienced overdue payments, and the average debt burden per business has increased to £25,000 – having a serious impact on those SMEs ability to pay their own creditors.
Some 78% of SMEs say they are being forced to wait a month beyond agreed payment terms, while another 45% are being kept waiting over two months. In addition, the bill for chasing late payments has now reached £4.4 billion a year.
Commenting on the research, Paul Horlock, CEO of Pay.UK, said: ‘It is concerning that so many smaller businesses are struggling because of late payments in 2019, especially as there are so many ways they can now get paid.
Late payments also impact a business’s ability to grow as they become “preoccupied with managing short-term cash problems”, thus taking time and resources away from any long-term plans for growth they may have, and small businesses preoccupied with cash flow problems are also less likely to invest in company resources or staff, further limiting their opportunities to grow – this has serious implications for the wider economy.
If your small business is struggling with late payments, do get in touch with our team for some advice on strategies to tackle the problem.