The figures represents an increase of £2bn since the previous researched data was released with the average amount owed to SMEs across the UK standing at £45,000 each at the end of 2011, an increase of £6,000 from earlier in the year.
The figures come in spite of the proportion of SMEs who are experiencing late payment having fallen (down to 785,000 from 861,000), their combined debt has now reached record levels with businesses also now waiting longer for invoices to be settled.
In the second half of 2011, SMEs said they were waiting on average 29.6 days longer than agreed payment terms, an increase over the 28-day delay reported in the first half of 2011.
And it appears that big businesses are still, in the main, those least likely to pay on time as more SMEs (41%) say they are the “worst offenders” compared to private companies, individuals, other SMEs and government departments.
Mike Hutchinson from Bacs says the increasing value of late payments and the extended terms that many SMEs are now experiencing, highlights the important role that automated payments can play in maintaining a smooth cash flow.
Mr Hutchinson said:
“Our research highlights the challenges faced by many thousands of SMEs in chasing payments from customers and maintaining a healthy cash flow which is the life blood of any successful business”
“We would always recommend that anybody running a business ensures that as many regular payments as possible are automated in order to maintain financial control. This will reduce the stress and financial cost of chasing payments for business owners.”
“Ultimately it is an issue for businesses of all sizes to address as prompt payment is not only good for the individual businesses involved in any given transaction, but throughout the whole supply chain.”
Philip King, chief executive of the Institute of Credit Management said:
“Although disappointing it is no surprise that the volume and value of late payments is rising and shows that the Government (through the department of Business, Innovation and Skills – BIS) is right to be prioritising ‘late payment’ as a key focus of resource.”
“Larger companies must do more to pay their suppliers on time, and be obliged to sign up to the Prompt Payment Code (PPC); Government should also take the lead by only awarding public sector contracts to those firms who are part of the Code and can demonstrate a genuine commitment in this area.”