Recent research carried out by Bacs found that the national late payment debt currently stands at a staggering £46.1 billion.
The Bacs survey of 350 UK companies found the rate of late payment to firms in Scotland was 67 per cent, just ahead of Northern Ireland at 66 per cent and ahead of England and Wales at 62 per cent and 59 per cent respectively.
Bacs found that sixty per cent of UK SMEs are now experiencing late payment issues and the average overdue amount is £38,186.
Just short of a million of the country’s smaller companies are facing a late payments burden, with potentially severe implications for their business.
Waiting weeks after a payment is due before receiving the money could be catastrophic for vulnerable small companies, particularly when the economy is struggling and cash flow is a major priority.
The Bacs survey also suggests SMEs and corporates are paying a further £9.16 billion a year in additional costs, and around a third of the firms surveyed said they are spending around £500 a month as a consequence of money owed to them, though some figures
quotes were as high as £10,000 a month.
These numbers are astonishing; late payments can deprive an organisation of essential cash flow and ultimately the opportunity to grow. With small businesses spending more than 10 hours a week pursuing late payments and others forced into bankruptcy, its
clear that something needs to change.
Small firms usually can’t lend interest free to larger companies, which late payments and extended payment terms force them to do. SMEs, which are one of the key drivers of a successful economy, are being hindered because of the increasing pressures of late
More organisations are moving towards Direct Debit as an alternative payment solution as the clear knowledge of regular income aids forecasting and sustainability, whilst enabling transactions to
be processed through highly secure technology and covered by the Direct Debit guarantee. This is supported by Bacs research which concluded that a staggering 8 out of 10 British adults have at least one Direct Debit commitment, with 67 per cent of household
bills paid this way.