Aldermore has published research into the extent that late payments are continuing to restrict small and medium sized businesses (SMEs).
The research, which was conducted in July this year amongst 300 SME firms throughout the country, confirms that during the past year, two in every five business owners have experienced an increase in the number of customers who are late paying invoices (in the wholesale and distribution sectors, the figure rises to one in every two). One in five firms say that chasing late payments has become a significant issue and is impacting cashflow.
However, despite the growing burden of late payments, 64% of respondents were unaware of the European Late Payment Directive, which is due to be implemented in March 2013.
“Late payments are a continuing drain on small and medium sized business owners in the UK,” said Damon Walford, managing director of Aldermore Invoice Finance.
“It’s critically important, at a time when we’re looking for SMEs to drive the economy out of recession, that they are freed from the shackles of late payments.”
Aldermore’s findings are supported by research recently published by BACS Payment Schemes, which confirms that more than one million UK SMEs are facing late payments with their total collective debt being almost £36.4 billion. The average UK SME experiencing late payment now has to wait 43.4 days beyond payment terms for their invoices to be settled. What’s more, business owners spend, on average, three weeks a year chasing overdue payments.
“Clearly, more needs to be done to make business owners aware of solutions that can help them address these issues. The government, trade associations, business groups, advisers and others all have a role to play in raising awareness of new legislation designed to help SMEs.”