UK SMEs are incurring large bills to collect money they are owed by other companies.
Annual research by Bacs Payment Schemes shows that the cost to SMEs to collect late payments has escalated significantly, from £2.6 billion in 2017 to £6.7 billion in 2018. 43 per cent of SMEs now say they are experiencing late payments, up from 37 per cent in 2017.
When considering staff time and interest on borrowing, the cost is as much as £9,000 for each firm to collect on late payments, with the average amount owed to businesses now at £17,000.
In 2017, £13 billion was owed to the country’s 5.7 million SMEs. That figure now stands at £14 billion in 2018. Adding to this, the research shows that more than a third are waiting two months beyond agreed terms for payment, up from a fifth last year.
Over a quarter of SME owners surveyed said they have been forced to withhold payments to suppliers, and 28 per cent have had to lower their own salaries to conserve money.
When it comes to cashflow, SMEs have a tight ship to run. It is therefore essential that business owners receive the specialist support and guidance they need to make effective decisions both now and for the future, as well as access to the right financial products suited to their specific business needs.
Our SME business experts at Beavis Morgan are available to structure your business with cashflow and profit forecasting to measure performance and maximise opportunities. We work to a pre-determined plan, to help you avoid any nasty surprises.
Through our partner businesses, BM Structured Finance and BM Advisory, we are also able to help with sourcing and restructuring debt finance for SME businesses, as well as assisting with resolving issues which can impact on business performance and success, and finding innovative solutions for businesses and individuals in distress.