New research has uncovered the hard-hitting financial implications of engrained late payment culture on the UK’s Small to Medium-sized Enterprises (SMEs).
The average amount owed to SMEs now stands at approximately £36,000. But 35% of SMEs indicated that late payment volumes of just £20,000 could threaten the future viability of the company.
£36.4bn is owed to these companies in late payments up and down the country, up from £35.3bn at the end of last year, the survey by Bacs Payment Schemes revealed.
Most SMEs experiencing late payments will wait 43.4 days after agreed terms before invoices are settled, with this problem even greater in the north of England, with the average wait being 46.8 days.
Bacs also calculated that companies in the north will spend over £200m (assuming staff were just on minimum wage rates) in 2012 to pay staff for the time spent chasing payments. This works out at 2.2 hours a week spent seeking settlement of invoices, or almost three working weeks a year.
Large companies were said to be the worst offenders by 37%, but a quarter also claimed that smaller businesses often paid them late.
Almost half said that the reasons that were used to justify late payments were cashflow problems.
Invoice Finance as late payment solution
Many SMEs can benefit from external funding solutions which are designed specially to help companies unlock large volumes of cash they have tied up in unpaid invoices.
Taking out an invoice finance facility with Skipton Business Finance could help your business prosper and benefit from better cashflow and more available working capital.
BUSINESS FINANCE FACT - In February 2013, there were almost 43,000 invoice finance clients in the UK using either invoice factoring or invoice discounting facilities.