|
Figures recently released by BACS
show that more than half of SME businesses (59 per cent) have
experienced problems with delayed customer or supplier payments at
some time. This number is almost double that of BACS findings in
2004 which showed just a third of SMEs had experienced some sort of
delayed payment.
BACS research also shows that the
total amount of money owed to UK SMEs is on the increase.
Collectively, the average amount of money outstanding to companies
with 250 employees or less has rocketed from £11 billion two years
ago, to almost £16 billion (£15,994,000,000).
Michael Chambers, managing director
of BACS, said “The fact that UK SMEs are waiting on £16 billion is
staggering and shows that the impact of late payments cannot be
underestimated. Late payments now pose a considerable problem for
more than half of all SMEs in Great Britain – if this figure
continues to rise, the knock on effect for the UK economy could be
disastrous. Business and financial managers up and down the country
need to tackle late payment issues head on to safeguard the
commercial interests of their organisations.”
SMEs that want to address late
payment issues before they get a grip on their business have a
number of helpful tools at their disposal. According to BACS, 69 per
cent of all small business managers and 91 per cent of financial
directors in mid-to-large corporates, would either be prepared or
would prefer to receive automated payments on an agreed date to help
ensure funds are cleared directly into bank accounts. However, many
are not taking simple steps towards encouraging payment by Direct
Debit and BACS Direct Credit. BACS research reveals that 59 per cent
of small businesses and 38 per cent of mid / large corporates do not
even include bank account details on bills.
In a bid to encourage good working
practices, BACS is stepping up its ‘Pay Me Direct’ campaign and
encouraging small business owners to ensure they include their bank
account details on invoices and billing statements along with the
Pay Me Direct message. The company has created a set of free
materials that SMEs can download and use in correspondence with
customers and suppliers. BACS has also developed ten top tips
containing advice on preventing late payments in association with
The Better Payment Practice Group, as part of a joint initiative to
provide expert information to businesses.
Commenting, Bill Barrott from the
Better Payment Practice Group said: “Considering the dangers
inherent in late payments, it is amazing how many companies do not
take precautions to protect themselves. We are committed to
improving the payment culture of organisations trading in the UK and
have established a Better Payment Practice Code, which urges firms
to adopt a responsible attitude to paying on time. Working together
with organisations like BACS we can offer expert advice and guidance
to UK businesses, and help minimise the impact of problems
associated with late payment.”
For more practical advice on dealing
with late payments, organisations should go to
www.paymedirect.co.uk
For more information about The Better
Payment Practice Campaign, please go to
www.payontime.co.uk
November 2006 |
