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Big Business and Late Payment

According to new research, small businesses are waiting more than eight weeks after they are due. What’s more, small firms are having payment terms dictated to them by larger businesses who are regularly violating their payment terms of their sales. 44% of SMEs experiencing late payment say that big businesses are the worst offenders, according to the survey by Bacs Payment Schemes Ltd.

It was also revealed that the national debt owed to small firms due to late payment now stands at over £30.2 billion. The average wait for payment is 38 days, or eight working weeks, with the average business waiting for more than £31,000 in overdue payments. 1 in 10 is owed £50,000 or more – so there are definitely huge sums of money involved.

Small companies in the north of the country are owed on average £39,000, almost double that of small businesses in the south who are on average owed around £23,000. Retail and distribution businesses are suffering the most with late payments, with nearly 60% waiting for overdue payment, with average outstanding payments of £43,000.

“Waiting eight working weeks after a payment is due before receiving the money could be catastrophic for vulnerable companies, particularly at a time when the economy is struggling and cash flow is key,” said Mike Hutchinson from Bacs. “We urge SMEs to look at where they can assert some control, automating payments wherever possible to save valuable time and administration costs, and remove some of the stress on the business and its owner.”

With Business Minister Michael Fallon naming and shaming those big businesses who fail to deliver on promises to combat late payment, the Prompt Payment Code will hopefully improve the situation .

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