In April 2013 the payment body, BACS reported that small businesses were owed £30.2bn in overdue payments, across the economy. Then, in February of this year research from Sage Pay revealed that SMEs are owed £55bn in unpaid invoices. The average business is now owed £11,358, with £30,000 outstanding for one in five SMEs.
For one in 10 companies, a third of invoices are paid late, leading to restricted cash flow and stifled growth, said Simon Black, chief executive at Sage Pay.
Recent analysis from Experian reveals that UK businesses were paying their bills almost 28 days late at the end of 2013. Late payers pose a big problem for small and medium businesses and firms can spend 3 or more hours a week chasing payment.
Standard payment terms in the EU are 60 days unless otherwise contractually agreed. Excessive standard payment terms are frequently demanded by large and often foreign corporations.
Politicians such as Michael Fallon and Vince Cable and journalist including from the FT have been vocal in their support of prompt and 30 day terms. Michael Fallon directs people to a name and shame website, which amongst others include Sainsbury’s, GlaxoSmithKline and Dell computers. A £55bn injection of cash would clearly of enormous benefit to small businesses and to the economy as a whole. Introducing an annual reporting disclosure on outstanding creditors is being considered as well as Government contract bars. The levying of additional corporate taxes to re-coup the cost of late payments to the economy could also be considered. Some related links below:
- Late Payments - BBC Radio4/File on 4
- Late Payments – BBC Radio4/File on 4 Transcript
- Payment terms ignored as SMEs wait eight weeks for money - BACS
- BIS proposes onerous ‘voluntary’ disclosures on creditor payment practice - BDO
- The Prompt Payment Code - ICM
- Ad-Production Trade Groups Rip Mars' Payment Terms – Advertising Age
- Vince Cable acts to shame late-payers in UK business - Financial Times
- Daily Telegraph - Hard look at late payers reveals SMEs are owed almost £55bn – Daily Telegraph
- UK SMBs are owed £55bn in outstanding invoices – Sage Pay