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An ever increasing number of SMEs in the UK are experiencing problems with late
payments according to BACS Payment Schemes Limited (BACS).
Figures released by BACS show that more than half of SME businesses have
experienced problems with delayed customer or supplier payments at some time.
This number is almost double that of BACS findings in 2004 which showed just a
third of SMEs had experienced some sort of delayed payment.
BACS research also shows that the total amount of money owed to UK SMEs is on
the increase.
Collectively, the average amount of money outstanding to companies with 250
employees or less has rocketed from £11 billion two years ago, to almost £16
billion.
Michael Chambers, managing director of BACS, commented: "The fact that UK SMEs
are waiting on £16 billion is staggering and shows that the impact of late
payments cannot be underestimated.
"Late payments now pose a considerable problem for more than half of all SMEs in
Great Britain.
"If this figure continues to rise, the knock on effect for the UK economy could
be disastrous.
"Business and financial managers up and down the country need to tackle late
payment issues head on to safeguard the commercial interests of their
organisations."
SMEs that want to address late payment issues before they get a grip on their
business have a number of helpful tools at their disposal.
According to BACS, 69% of all small business managers and 91% of financial
directors in mid-to-large corporates, would either be prepared or would prefer
to receive automated payments on an agreed date to help ensure funds are cleared
directly into bank accounts.
But many are not taking simple steps towards encouraging payment by Direct Debit
and BACS Direct Credit. BACS research reveals that 59% of small businesses and
38% of mid/large corporates do not even include bank account details on bills.
In a bid to encourage good working practices, BACS is stepping up its "Pay Me
Direct" campaign and encouraging SME owners to ensure they include their bank
account details on invoices and billing statements along with the Pay Me Direct
message.
The company has created a set of free materials that SMEs can download and use
in correspondence with customers and suppliers.
BACS has also developed ten top tips containing advice on preventing late
payments in association with The Better Payment Practice Group, as part of a
joint initiative to provide expert information to businesses.
Bill Barrott from The Better Payment Practice Group commented: "Considering the
dangers inherent in late payments, it is amazing how many companies do not take
precautions to protect themselves.
"We are committed to improving the payment culture of organisations trading in
the UK and have established a Better Payment Practice Code, which urges firms to
adopt a responsible attitude to paying on time.
"Working together with organisations like BACS we can offer expert advice and
guidance to UK businesses, and help minimise the impact of problems associated
with late payment."
Source:
Credit
Control Journal
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