SMEs 'facing increasing late payments problem'
Commercial insurance
15th April 2010
The problem of late payment by creditors has grown for the UK's small and medium-sized enterprises (SMEs), a new study has shown.
According to a report by NatWest and RBS, less than half (45 per cent) of those businesses affected by the issue have taken measures to confront it.
Of those small firms polled, 71 per cent admitted they had suffered from late payments in the previous year with an estimated £62.87 billion worth of invoices paid outside terms and conditions over the past 12 months.
Despite SMEs having around £15.7 billion in invoices over 120 days in arrears, many are failing to address the threat to their operations.
The problem seems to be most acute among companies with turnover of less than £1 million and many complain they have wasted time chasing debts to the detriment of their operations.
Stephen Alambritis, Federation of Small Businesses head of public affairs, warned: "Poor payment practices can drastically affect cash-flow for small firms at a time when business owners are doing their best to hold on to precious funds."
SMEs seeking insurance for business are advised to put policies in place to protect against late payments and to ensure they pay their own bills on time.
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