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UK SMEs owed almost £16 billion in late payments

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An ever increasing number of small-to-medium sized enterprises (SMEs) in the UK are experiencing problems with late payments according to BACS Payment Schemes Limited (BACS).


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




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