Late payment picture beginning to improve
The proportion of smaller firms experiencing the adverse effects of late payments fell by 20 per cent in the first six months of the year.
Research from Bacs, the payment service, suggested the improvement has come about through the efforts of individual businesses in chasing debt.
Mike Hutchinson, head of marketing at Bacs, said: “It’s extremely heartening to see that there are now many companies making great strides to help themselves beat the late payments cycle by sharpening up their billing and credit control procedures.”
Despite the reduction in late payment problems, over three-quarters of a million small firms (769,000) were still affected by unpaid invoices, the Bacs study revealed.
The total amount of money owed these firms after the first six months of 2010 – an average of £32,000 per business – was nearly a third more than the corresponding sum recorded at the end of 2009 when average outstanding bills came to £25,000.
Some £24.6 billion is still owed to businesses across the UK.
Mr Hutchinson continued: “There is valuable help and advice available, through schemes like the Prompt Payment Code, for businesses still suffering from late payments, and SMEs will be well served to draw on all available resources to find new routes forward.”
Bacs suggested that more firms look at adopting automated payments methods rather than depend on cheques arriving in the post.
Some 79 per cent of SMEs still use cheques to settle invoices, but cheque payments are due to be phased out by 2018.
Mr Hutchinson added: “SMEs should consider replacing the use of cheques sooner rather than later. Automated payments offer many benefits in streamlining processes and helping cash flow.”