A million small firms hit by late payments

Over a million small and medium-sized business have been affected by late payments totalling over £30bn, according to data released by to Bacs Payment Schemes Limited.

This figure means that small firms have seen an increase in money owed of more than £11bn from two years ago, and the number of SMEs reporting that they are experiencing payment delays rose by over 65% from 2008 to 2009.

The report also highlighted how the problem can spiral out of control, with 52% of small firms stating that if they’re paid late, they’ll pay their invoices later too. A third of small companies reported that they are paying others later this year than in 2008.

Cashflow is the most common reason for overdue payments, with 30% of businesses surveyed citing this as the main excuse given. But 6% of late payers claim they forgot all about it, with the same number relying on the age-old excuse ‘the cheque’s in the post’.

“While many businesses which owe money to others do undoubtedly have problems in paying bills quickly, there is a question mark over those who may be ‘playing’ the system and delaying payment for as long as they can,” said Michael Chambers, managing director of Bacs.

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