British small businesses are owed a total of £35bn and are waiting longer than ever before for payment, according to research by BACS. The total owed to British SMEs has increased by almost £2bn on the same time last year.
Payments are also taking longer to arrive. The average firm is waiting 29.5 days longer than the agreed payment terms to have its invoiced settled. That’s up from 28 days in 2011. The report found that an increasing number of companies require payment terms or 120 days meaning that some invoices for work and services don’t get settled for nearly 5 months, having a detrimental impact on cashflow.
Mike Hutchinson from Bacs says: “”Our research highlights the challenges faced by many thousands of SMEs in chasing payments from customers and maintaining a healthy cash flow which is the life blood of any successful business.”
“We would always recommend that anybody running a business ensures that as many regular payments as possible are automated in order to maintain financial control. This will reduce the stress and financial cost of chasing payments for business owners.
“Ultimately it is an issue for businesses of all sizes to address as prompt payment is not only good for the individual businesses involved in any given transaction, but throughout the whole supply chain.”
