Apr 24, 2013
National late payment debt standing at £30.2bn
Bacs, the organisation behind Direct Debits, have revealed that businesses across the UK are owed a collective debt of £30.2 billion, with 1 in 10 small and medium-sized businesses (SMEs) reporting to be owed a staggering £50,000 or more in late payments. The study indicates the growing pressure being felt by business owners, as nearly 25% dealing with overdue settlement reported their concern about the impact the outstanding debts was having on their company.
Britain’s smaller businesses are feeling the strain of delayed payments the most, now having to wait an average of 38 days (almost 8 working weeks) before they receive any money. Of the UK’s 1.7 million SMEs, 60% say that their larger counterparts ignore the agreed payment terms and pay when they want to.
When chasing the overdue payments, nearly one in five SMEs were told that the client had not got around to settling the invoice or had simply forgotten to pay. This is causing a knock-on effect for the suppliers to small businesses, as 55% reported their incoming invoices are settled on terms matching that of their own clients.
Mike Hutchinson, head of marketing at Bacs, said “Just short of a million of the country’s smaller companies are facing a late payments burden, with potentially serious implications for their business. On top of that, our research shows that they can’t rely on their customers meeting payment terms which they have set in the first place.
Waiting eight working weeks after a payment is due before receiving the money could be catastrophic for vulnerable companies, particularly at a time when the economy is struggling and cash flow is key.”
The automation of payments can make a real difference in controlling your business’s cash flow. Assisting the manual process by significantly reducing man hours, introducing Direct Debit for B2B payment collections will increase cash flow and save costs, as well as allow you to forecast accurately. Asserting this control over the invoicing process will not only have a positive effect on business performance, but also reduce the uncertainty of the business owner as well.
For more information on our Direct Debit services for business, please contact our sales team.