Late payments leap 40%

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British small and medium sized enterprises (SMEs) are now owed a massive £25.9 billion after overdue payments rocketed by almost 40% over the last year.

These are the findings from ongoing research into the problem conducted by Bacs Payment Schemes Limited (Bacs), the organisation behind Direct Debit and Bacs Direct Credit.

The national average of outstanding payments was frighteningly high in 2008 – £38k , up £8k on 2007 figures. 

The number of SMEs finding themselves owed money across Great Britain also increased to almost six out of every ten, up from 51% in 2007 to 57% in 2008. And it’s manufacturing which sees the highest incidence of late payments, with almost two thirds (65%) of SMEs in this sector experiencing a delay in invoices being paid, compared with 53% of those in the service industry.

The most common cause of late payment is cash flow problems, with almost a quarter (24%) saying this is the excuse they’re given. There are differences across industries, though – SMEs in the service sector cited the economic downturn as the reason they were given most often (16%), where as 35% of manufacturing and 30% of distribution SMEs were told cash flow was the issue.