It's time to act, not talk as SMEs lose billions
July 16, 2015
“Simply staggering,” is how Luisa Grey, a director at Eazipay, one of the UKs largest Direct Debit bureaux, reacted to new figures claiming that SMEs are forking out around £10 billion a year chasing late payments.
The figures released by Bacs Payment Schemes Limited (Bacs) show that while the overall late payment burden shouldered by the nation’s SMEs has fallen by about £10 billion - down from £41.5 billion in 2014, to £31.3 billion today, the cost of recovering monies owed to them has risen to an all-time-high of £10.8 billion. This cancels out any gain from the overall reduction.
“It is simply adds insult to injury that small companies are being forced to spend over £11,000 each a year, chasing money that is rightfully theirs – that’s almost £1,000 a month or the equivalent of taking on a new member of staff,” says Luisa adding: “The Bacs figures also show that 80 per cent of SMEs struggling under the weight of late payments are being kept waiting at least a month beyond their agreed payment terms.
“Businesses are being forced to rely on expensive overdrafts to support their cash-flows and over a quarter say that late payments are forcing them to pay their own suppliers late. It’s nothing short of staggering.”
Luisa is also sceptical of the government’s announcement that it is to establish a Small Business Conciliation Service which has, as one of its main objectives, the settlement of disputes relating to late payments.
“Once again the government is aiming at the wrong target,” says Luisa, “The issue of late payments isn’t always about disputes, it’s about one company receiving goods and services from another company and delaying payment for them.
“The government seems to be wilfully avoiding the actual issue and rather than taking action now, it is proposing that conciliation is the way forward.
“How many viable, profitable businesses will go to the wall while the government ‘talks’ about the scandal of late payments rather than taking immediate action? It’s Nero fiddling while Rome burns.
“My advice to small businesses is to set up Direct Debits to make sure they are paid the full amount on the day that they are owed it and make use of their flexibility. Small businesses can adapt themselves to the individual characteristics of their customers more rapidly than large companies can, so they should work to strengthen their relationships.”
Cambridgeshire-based Eazipay Ltd, offers a reliable and cost-effective way for businesses to collect Direct Debit payments from their customers and works with over 1,600 companies in a wide range of market sectors throughout the UK, Europe and beyond.
NOTES TO EDITORS
About Eazipay Ltd
- Established in 2002 by local entrepreneurs Kathy and Ron Bradney, and their colleague, Luisa Grey, Eazipay Ltd is one of the UK’s largest Direct Debit processing companies.
- Eazipay provides regular Direct Debit services to over 1,600 SMEs and corporate organisations in a wide range of market sectors throughout the UK, Europe and beyond.
- In September 2014, Eazipay celebrated its most significant milestone to date when it saw its Direct Debit processing and collection volumes break the £1 billion mark.
- Eazipay was awarded ‘Affiliate’ status from Bacs, the governing body for Direct Debit processing in the UK payments industry. The company is now a member of an exclusive group of 55 other Bacs Affiliates, which includes representatives from some of the UK’s leading businesses, banks and building societies, as well as government organisations and banking technology providers.
- As well as its Bacs Affiliate status, Eazipay was also one of the first Direct Debit bureaux to receive the ISO9001:2008 certification for Quality Management System and direct authorisation from City watchdog, the Financial Conduct Autority (FCA).
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