Late payment culture 'adding to small business woes'
17 May 2012
Small businesses are continuing to feel the pain of the UK’s late payment culture, with the average small firm having £45,000 worth of unpaid invoices at the end of 2011.
The latest research, from payment organisation Bacs, reveals that small and medium-sized businesses were owed some £35.3bn at the end of last year.
Their combined debts climbed by almost £2bn when compared to the first half of last year - the highest level in almost five years.
SMEs affected by the problem of late payment, are waiting on average 30 days longer than their original payment terms to have their invoices settled.
Bacs said large companies were the main culprits, with some organisations demanding payment terms of 120 days.
The findings follow a report by the all-party Parliamentary Small Business Group, which called for all companies supplying the public sector to be forced to sign the 'Prompt Payment Code’.
However the MPs acknowledged that the code is not being adequately enforced, and ‘alternative solutions’ may have to be considered.
The voluntary code is designed to encourage and promote best practice between organisations and their suppliers.
Signatories to the code commit to paying their suppliers within clearly defined terms, and commit also to ensuring there is a proper process for dealing with any issues that may arise.
Please contact us if overdue payment is becoming an issue for your business.