According to nebusiness.co.uk, Bacs, the governing body behind Direct Debits have released their latest research on the UK’s late payments culture. Currently, businesses across the UK are collectively owed GBP30.2 bn in late payments with one in ten small and medium-sized businesses (SMEs) is reported to be owed GBP50,000 or more in unsettled invoices. Reasons cited to SMEs when chasing the overdue payments were that the client had not got around to sanctioning the payment or they had simply forgotten about it. This is also causing a knock-on effect for the suppliers to SMEs, as 55% stated their payments terms mirror those set by their own clients.
The research also revealed that small businesses have to wait an average of 38 days, nearly eight working weeks, before they receive any payment. Of the UK’s 1.7 million SMEs, 60% stated that their larger counterparts ignore the agreed payments and only settle their invoices when they want to pay up.
Mike Hutchinson, head of marketing at Bacs, said: “Just short of a million of the country’s smaller companies are facing a late payments burden, with potentially serious implications for their business. On top of that, our research shows that they can’t rely on their customers meeting payment terms which they have set in the first place.”
A SmartDebit spokesperson from the firm commented on the research, “Most notably, the national collective debt from late payments has reduced from the GBP36.5bn that Bacs reported last year. Despite this slight improvement, more needs to be done. Recently, we have seen the Business Minister, Michael Fallon, announce plans to name and shame those in the FTSE 350 yet to sign up to the Prompt Payment Code as well as the introduction of the EU Directive on late payments.
The impact of this, and whether it will have any such influence of payment terms is unknown as of yet, however we urge all businesses to assess where they can gain control through the automation of payments. Paperless Direct Debits are a sure fire way to save time and reduce administration costs when collecting owned monies, removing pressure from the owner and ensure accurate forecasts.”
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