Figures from Bacs, the company behind Direct Debit and Bacs Direct Credit in the UK, show small and medium sized businesses (SMEs) are owed a total of £14 billion by customers, leaving them with a bill of more than £2 billion every year.
Scotland has the highest percentage of SMEs reporting late payments at 46 per cent. Northern Ireland follows with 39 per cent, then England 37 per cent, and Wales at 34 per cent.
SMEs are increasingly relying on overdrafts. Of those facing late payments, 16 per cent struggle to pay their staff on time, while 28 per cent of company directors reduce their own salaries in order to keep essential working capital inside their businesses.
39 per cent of companies spend up to four hours a week chasing late payments, and 12 per cent of SMEs employ someone dedicated to pursuing outstanding invoices.
The research by Bacs also shows that 19 per cent of SMEs affected by overdue settlement say being owed between £20,000 and £50,000 would be enough to drive them into bankruptcy, with some 7 per cent of businesses saying they are already under threat. However, the total figure owed is down on the £30.3 billion figure recorded five years ago.
What is important now more than ever is that SME 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.