Small Businesses across the UK are feeling the pinch from late paying customers following the release of a report from Bacs.
The continuing practice of late payments is shrinking small and medium-sized businesses across the UK with a hefty bill of more than £2bn ever year, new research reveals.
According to figures produced in a report by Bacs Payment Schemes, small to medium sized businesses, or SMEs as they are known, are owed a total of £14bn by customers in the UK. Whilst that is an improvement on the £30.3bn figure that it was five years ago, it is still a massive concern for leading Business figures.
Despite a significant reduction in the overall debt owing, more than a third of all SMEs in the UK say payment of invoices is often prolonged way back the agreed terms. Almost a fifth of Small Businesses say they would face bankruptcy if they were owed between £20,000 – £50,000 and 7 per cent say they are already in the red danger zone.
Bank overdrafts are an increasingly common resource with almost a 25% of small businesses say they rely on borrowed cash to continue trading.
The research done by Bacs also shows that 16 per cent of SMEs struggle to pay staff on time, that the majority of companies spend almost four hours a week chasing late payments, and that 12 per cent employ a specific role dedicated to pursuing outstanding payments.
Almost a third of companies face delays of at least a month beyond their terms and nearly 20 per cent are having to wait more than 60 days before being paid.
SMEs are being urged to take action when payment terms are not met or face severe consequences. SMEs across the country are already facing an uncertain future with the continuing economical fears as a result of Brexit.
Experts say it is imperative companies act diligently when it comes to not getting paid on time and adopt a pragmatic policy for those that do not pay on time.