cost of collecting late payments rockets
December 12, 2018
The UK’s smallest businesses are facing a bill of £6.7 billion, up from £2.6 billion in 2017 – just to collect money they’re already owed, according to new research by Bacs Payment Schemes Limited (Bacs).
This latest research, from the people behind Direct Debit and Bacs Direct Credit in the UK, shows that the cost of recovering overdue money is now at an average of £9,000 for each business. Additionally, more than a third of small to medium sized enterprises (SMEs) coping with late payments are waiting two months beyond agreed terms to be paid. That’s double the number of businesses who said the same in 2017 (19 per cent).
The delay in receiving settlement is having wide-reaching effects, with over a quarter of SME business owners who do experience late payments forced to pay their own suppliers late; 28 per cent also say they have had to cut their own salaries in order to keep cash inside their businesses.
In addition, the survey revealed a six per cent increase in the number of SMEs experiencing late payments overall, up from 37 per cent in 2017 to 43 per cent in 2018; that makes for a total late payments bill of £13 billion across the UK, close to 2017’s £14 billion. More positively, the average amount each company is owed has actually fallen, down from £22,000 in 2017 to £17,000 in 2018.
Other headline findings:
• More than three quarters (78 per cent) of SMEs owed money are being forced to wait one month or more beyond their agreed terms before they are paid.
• Over a third (34 per cent) of SME business owners experiencing late payments say they have to rely on overdrafts to help them meet their monthly obligations.
• 40 per cent of SMEs owed money claim that large companies are the worst late paying offenders.
• 51 per cent of SMEs take large company payment practices into account before trading with them.
• 43 per cent of SMEs spend around £4.4 billion in admin costs alone, chasing late payments.
• 11 per cent of SMEs struggling with overdue invoices have to employ someone to chase for payment.
• 21 per cent of companies not experiencing late payments say they are concerned about the issue, an increase of 11 per cent on 2017 figures.
• 82 per cent of SMEs not experiencing late payments cite better invoicing practices along with being paid by Bacs Direct Credit as the reason they don’t experience late payments.
For further press information, please contact:
Damion Clark at Real PR (Consultants) LLP. Tel: 01353 667934 or 07789 911314 Email: email@example.com