According to a recent survey conducted by the payment system Bacs, many SMEs are forced to wait around two months before they receive any payment from their customers.
Times are already tough for many SMEs, so adding this fuel to fire could force many businesses to collapse who just can’t afford to wait that long to be paid.
Manufacturing came out one of the worst payers with 56 per cent of suppliers having to wait the two months before being paid. On average SMEs in that sector are owed £40,000 each of the £9.7 billion in overdue payments.
But SMEs in general are owed a whopping £31,000 each in unpaid invoices, totalling £30 billion overall. Mike Hutchinson from Bacs spoke of the results from the survey and the implications this can have on SMEs.
He 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.
“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.”
But what reasons are businesses using for not paying their bills? According to the survey, one in five customers said they had forgotten to pay or hadn’t got around to doing it. If the reasons are this petty then aren’t there some steps that SMEs can take to ensure they get paid on time?
Are you an SME waiting for outstanding payments? On average how long do you have to wait to be paid by your customers?
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