TAS Ventures - Recruitments Specialists

Late Payment – UK Small Businesses Chasing £8.3 Billion

Source: Barclays Local Business

As part of a small business you know how annoying late payment can be, and the problem appears to be showing no signs of improving. A new survey from Barclays Local Business has found that small businesses in the UK were owed approximately £8.3billion at the end of February 2008. 

The survey found small businesses would be spending more than an hour of the extra leap year day chasing up late payments – equating on a national level to more than four million wasted working hours or 544,640 wasted working days.

Nearly six in ten (59 per cent) SMEs experience problems with late payment; with a third of this number (33 per cent) admitting that customers or suppliers failing to pay on time threatened the day-to-day survival of their business. 60 per cent of those surveyed felt they wasted valuable resources chasing debts, while more than a third (39 per cent) of bosses are currently using their own money to keep their business afloat while they wait on outstanding payments.

John Davis, marketing director for Barclays Local Business said: “The fact that SMEs in the UK are facing a £8 billion deficit due to late payments is extremely worrying. A regular and reliable cashflow is essential to the smooth, day to day running of a business – particularly a smaller one - and the majority of SMEs cannot afford to wait on money they are owed without feeling the impact on their bottom line.

On average, at any given point during the year, SMEs are owed more than £2,000 from suppliers or customers who have failed to pay during the standard 30 day invoicing period. Entrepreneurs typically have to wait nearly a fortnight (12.3 days) after the invoice due date before they get paid.

As a result, approximately 1.5 million SMEs in the UK have an employee dedicated to chasing overdue payments equating to yet more costs. In 90 per cent of the organisations that don’t have someone specifically responsible for the job, owner managers have to pursue outstanding payments personally; distracting them from the day to day running of their business.