In recent surveys, one from Bacs and another from NatWest/RBS show that late payment is still a major concern for SME’s.
Unfortunately SME’s must also take some of the blame for not being paid on time. Suppliers are extending their credit terms to keep hold of as much cash as possible, and while this is a viable credit management strategy, it shows the importance that SME’s should attach to their own credit management practices.
Agreeing payment terms in advance, invoicing correctly and on time reduces the chances of late payment or your invoices being disputed. It might be fashionable to blame big businesses for squeezing smaller suppliers; this is not always the case.
SME’s must get the basics right, and then perhaps they would understand the true reason behind these late payment figures. The NatWest/RBS research states that 71 percent of SME’s in the UK have suffered from late payments over the last 12 months, with the collective value of invoices paid outside of the stipulated terms and conditions estimated at £62.87 billion. As a result, 235,000 SME’s claim time wasted chasing debt has adversely affected their business.
Bacs researched published on the same day said that only 57 percent of SME’s nationwide had experienced late payment, and that the national mean amount outstanding to the average SME was £25,000.