Small businesses have suffered from late payments to the tune of £63bn over the past year, it has been claimed.
According to new research from NatWest and RBS, more than 70% of UK small and medium-sized businesses have been affected by late payment in the last 12 months, with the total number of invoices falling overdue standing at around £62.87bn. Some £15.7bn of this was more than 120 days late.
Around 235,000 small businesses said that time spent chasing unpaid bills had negatively impacted on their business.
Small businesses also suffered at the hands of late-paying customers more than larger companies. One in five businesses with an annual turnover of between £250,000 and £500,000 has been affected, compared to one in 15 medium and large businesses. For businesses turning over less than £1m, the equivalent of 12% of their annual turnover is paid late.
“Bad debts and late payment of invoices are endemic problems for UK businesses,” said Peter Ibbetson, chairman of small business for NatWest and RBS.
According to the Department of Business, Innovation and Skills (BIS) late payments were responsible for around 4,000 business failures in 2008 alone.
Stephen Alambritis, head of public affairs, Federation of Small Businesses (FSB), added: “Poor payment practices can drastically affect cashflow for small firms at a time when business owners are doing their best to hold on to precious funds.
“Since the economic downturn we have been urging businesses and agencies in both the public and private sector to sign up to the Prompt Payment Code to highlight best practice and help boost the cashflow of small firms during these tough times.”
© Crimson Business Ltd. 2010