The study comes at a time when Bacs, the governing body behind Direct Debits, claims that over GBP36bn in late payments is owed to small businesses in the UK. According to YouGov, 22% of small businesses have declined to do future business with customers who have paid late in the past.
The research revealed that 85% of small and medium-sized businesses (SMEs) have been severely affected by late payments over the last two years. Furthermore, 47% of these businesses claim their worst repeat offenders pay late three times a year or more.
The impact of late payments on business owners was also highlighted with 30% stating that they have used personal money or assets in order to improve their cash flow. Respondents have also suffered from mental health issues with 20% having suffered from extreme stress. In addition, 11% of case said late payments nearly caused their business to fail.
In terms of time taken to receive payment, 66% stated they have to wait more than a month past the agreed terms for owed monies, whilst 11% had to wait more than half a year.
SmartDebit offer paper and paperless Direct Debit payment collections services across the UK. A spokesperson explained the benefits, “In the battle against late payments, we have seen businesses begin to request payment upfront, resort to legal action, spend valuable time chasing their customer’s finance team and now refuse future business altogether. There has been large increase in the number of small businesses approaching us to improve their business-to-business payment collections and gain control of their cash flow once more. A number of our clients are signing their customers up to pay via Direct Debit and simply issuing them an invoice which states the amount owed and when the money will be debited from their account. There is no time or money wasted chasing payments, resulting in increased productivity and a healthy cash flow.”
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