According to figures released by payment company Bacs, the amount of money owed to small firms has reached a record three year high with the cash owed to companies by their customers standing at a staggering £33.6 billion – an increase of 10 per cent on last year’s record figure.
“Just when we were hoping it wouldn’t get any worse for small companies, it just has,” says Luisa Grey, Director of Eazipay, one of the UK’s leading Direct Debit processing companies, adding: “It seems that the worst culprits are large organisations who are keeping their creditors waiting an average of 28 days longer than their payment terms before their invoices are settled.
“The financial pressure coupled with the emotional stress can become intolerable with small companies being forced to slash their overheads in order to stay afloat – even though there is nothing fundamentally wrong with their businesses. It’s a reaction brought about purely by being paid late.”
According to the data, SMEs are owed around £39,000 each and some are being kept waiting as long as two months before being paid which not only impacts on vital cash flow buy makes business planning a near impossibility.
“The issue of late payments coupled with the banks’ reluctance to open their vaults means that small companies – which really are the lifeblood of the economy – are being squeezed unfairly, especially at a time of national and international economic uncertainty”, adds Luisa.