Late payments to small UK businesses hit all-time high

[Reuters] Unpaid bills owed to small businesses by their customers are at an all-time high, payments company Bacs has said, highlighting the challenges faced by companies in the sluggish British economy.

Small and medium enterprises (SMEs) are owed a total of 33.6 billion pounds – a rise of 10 percent in the last 12 months and the highest figure since records began in September 2007.

“The issue of late payment is continuing to get worse for SMEs in the UK at a time when they need to be able to plan ahead for growth and ensure a strong cash flow,” said Mike Hutchinson, head of marketing at Bacs.

“This issue not only hits the business but owners are reporting how it puts them under great stress personally, which has further negative repercussions,” he said.

SMEs are owed an average of 39,000 pounds each and are waiting as long as two months to get paid, the report said, causing owners to worry about their company’s future in an uncertain economic environment.

The worst offenders for late payment are large companies, Bacs said, and the retail and distribution sector is owed the most.

Small and medium sized companies have been complaining about the strain on their finances and their difficulties in getting bank credit. Economists see the lack of finance at SMEs as one of the main obstacles to more investment and job creation.

The government is planning measures to encourage bank lending to small businesses, currently lower in Britain than in other major European economies.

Weak manufacturing levels in Britain and slow economic growth have led economists to warn that the country could be on the brink of recession.

Tags: economic climate, late payments, small businesses, SMEs

Posted by Tabitha Cole on Thursday, November 3rd, 2011 at 9:44 am.

Filed under Data Bank, News, SMEs, Tagged as: , economic climate, late payments, small businesses, SMEs.