SMEs in the North suffer most over late payments

SMALL to medium sized businesses (SMEs) in the North of England are owed more in late payments than their southern counterparts, according to new research by Bacs Payment Schemes (Bacs).

More than half (59 per cent) of SMEs in the North of England are owed an average of £39,000 because of late payments, the study found. Fifty five per cent of SMEs in the south of the country are owed an average of £23,000 in late payments. According to the survey, small companies in the UK are now having to wait an average of 38 days – or almost eight working weeks – before they see any money.

More than half (58 per cent) of the country’s 1.7m SMEs reported that large companies were ignoring agreed payment terms, and choosing when they want to pay up.

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The research from Bacs, the company behind Direct Debit and Bacs Direct Credit, showed that the national late payment debt now stands at £30.2bn, with one in 10 SMEs claiming that they are owed £50,000 or more in overdue payments.

Business owners are feeling the pressure, with almost a quarter (23 per cent), of those reporting overdue settlement saying they were concerned about the impact outstanding debts will have on their company.

The retail and distribution sector is being hit the hardest, with almost 60 per cent of those surveyed saying they were being paid late, with average outstanding payments of £43,000, giving a total of £12.3bn overdue for that sector alone. Frustratingly, when chasing late payment, almost one in five SMEs (18 per cent) were simply told the customer had either forgotten to pay or just hadn’t got around to settling the bill.

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. 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.”

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