The number of small and medium enterprises experiencing late payment is rising, with the average owed at any one time being £27,000.
According to research from Bacs, the organisation behind Direct Debit and Bacs Direct Credit, 53% of the country’s SMEs have experienced late payment, up from 45% in June 2010.
The length of time they have to wait is an average of 39 days beyond agreed payment terms, an increase of nearly eight days over June 2009. And that rises to almost 50 days within the distribution sector.
The burden of chasing overdue invoices is also impacting on smaller British businesses, which are forced to spend an average of half a day every week pursuing payment. That means that around 158m man hours are lost to the British economy just in chasing bill settlement, says Bacs.
Large corporates are responsible for many of the late payments that make up the £24bn owed to SMEs. A third of SMEs say that big businesses settle bills late, with those in manufacturing the most likely to suffer delay at the hands of the big corporates.
Mike Hutchinson, head of marketing at Bacs, said: “Late payment remains a big problem for British SMEs with billions of pounds overdue against bills, causing small businesses to use up millions of man hours in chasing invoice payment.
“Cash flow is an essential business priority, particularly in a period of economic uncertainty, and we urge SMEs to consider turning to automated payments wherever they can to manage the money which is under their control.”