Big firms perceived to be late payers

24 May 2011

24 May 2011 | Angeline Albert

Large corporations have the worst record for late payments to their small suppliers in the UK, according to a survey of SMEs.

Research conducted by BDRC Continental on behalf of automated payment system Bacs showed a third (33 per cent) of SMEs believe big private sector firms – those with turnover of more than £1 million – are the worst at settling their bills on time.

The survey of 471 senior finance decision makers and owners of UK SMEs found 27 per cent thought no one single group – individuals, public or private organisations – performed worse than another in terms of payment.

Some 18 per cent of those surveyed blamed SMEs (excluding sole traders). Ten per cent surveyed blamed sole traders, and 6 per cent said government and not-for-profit organisations were the worst culprits. The remainder gave other responses.

However, the survey did note the public sector and not-for-profit organisations have improved their performance, paying more of their bills on time. The number of SMEs suffering late payment from these organisations almost halved from 11 per cent to 6 per cent in the second half of 2010.

But the overall picture was that 53 per cent of UK SMEs were paid late, a larger number than the 45 per cent recorded in June 2010. Small firms have to wait an average of 39 days beyond agreed payment terms – although this is the same as the last survey, it is an increase of nearly eight days since June 2009 – and have a total of £24 billion outstanding. Of the £24 billion owed to SMEs, £11 billion is owed by large businesses. 

Britain’s SMEs spend an average of 3.4 hours a week chasing money, losing 157.5 million hours collectively each year.

Mike Hutchinson, head of marketing at Bacs, said in a statement: “Late payment remains a big problem for British SMEs with billions overdue against bills, causing small businesses to use up millions of man hours in chasing invoice payment.”

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