Over half of Britain’s small to medium-sized firms have been the victims of late payment, and the average amount owed at any one time stands at £27,000.
That is according to new research from Bacs, the organisation behind the Bacs direct debit system, which shows the full extent of the payment problems blighting small UK companies.
The research revealed that Britain’s small and medium-sized companies are owed a total of £24bn, and the number of small firms afflicted by late payment has increased by 8% in the last twelve months.
Even when small firms do eventually receive the money their owed, the average waiting time currently stands at 39 days beyond agreed payment terms.
Furthermore, the authors of the research claim that smaller firms have to devote an average of half a day each week to chasing unpaid invoices which equates to more than 158 million man hours per year.
Grim up north
The study also shows that small firms in the north of England suffer the most when it comes to overdue debts – companies based between the midlands and the Scottish border have to wait an average of 52 days longer than anticipated to recover their outstanding invoices.
Although increasing numbers of public and third sector bodies are now paying up on time, big companies are becoming an ever-increasing problem – 33% of entrepreneurs who responded to the Bacs survey said that large corporate clients don’t pay on time.
Mike Hutchinson, head of marketing at Bacs, said: “Late payment remains a big problem for British SMEs with billions overdue against bills, causing small businesses to use up millions of man hours in chasing invoice payment.
“Cash flow is an essential business priority, particularly in a period of economic uncertainty, and we urge SMEs to consider turning to automated payments wherever they can to manage the money which is under their control.”