Late payments 'still an issue for UK small firms'

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Late payments 'still an issue for UK small firms'

The issue of late payments continues to blight many small to medium-sized enterprises (SMEs) across the UK, new research has revealed.

Data compiled as part of the latest Bibby Financial Services (BFS) SME Confidence Tracker report for Q2 this year showed that in excess of 1.2 million UK SMEs suffered financial losses as a result of bad debt and late payments in the preceding year.

The average outstanding invoice amount among those waiting to receive payment was £11,829 - a considerable sum given the vast number of businesses that are affected by the issue of late payments across the country.

Overall, 27 per cent of UK SMEs stated they had lost money as a result of poor payment practices by their clients.

Businesses operating in the construction and transport sectors were shown to be the worst affected, with 29 per cent and 30 per cent respectively of respondents in these areas facing late payments.

Furthermore, the main reasons cited by organisations for a failure to receive payment were shown to be varied, and included customer insolvency, payment disputes and changes to payment terms.

BFS global chief executive David Postings commented: "Bad debt is a chronic problem for SMEs and can lead to staff cuts, delayed investment plans and, at worst, insolvency.

"Following the UK's vote to leave the EU there is clearly some anxiety amongst SMEs and throughout the wider economy. But now is the time for businesses to take growth and stability into their own hands and this must start by taking a more planned approach to chasing payment and protecting themselves against the effects of bad debt."

He added that SMEs now need to take steps to ensure late payments are effectively kept on top of and not allowed to spiral out of control. This requires robust financial management and attention to detail, as well as ensuring customers are aware of their financial obligations.