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Small businesses owed billions in unpaid invoices

Small businesses owed billions in unpaid invoices

Small and medium-sized businesses are owed a staggering £55 billion in unpaid invoices, emphasising the growing problem they face from late payments.

The average small business is now owed £11,358, according to commercial payment system Sage Pay, while one in five companies is still owed at least £30,000.

Large corporations were warned by the Government to make payments on time, following a public enquiry last summer.

But the problem is worsening rather than improving. The total debt owed to small businesses has grown by 52% in the last six months.

One in ten companies receive a third of their payments late, according to Sage Pay’s report, while two thirds spend weeks attempting to chase up on unpaid bills.

The company’s chief executive, Simon Black, said old fashioned “paper and post” invoicing was proving detrimental and was proving an excuse for late payments.

“Given the environment we’re now living in, this process is not only antiquated, it’s actually depriving small businesses of critical revenue,” he said.

“For smaller businesses in particular, this delay in payment can cause significant problems and can affect the overall performance of the company.”

Tracey Ewen, managing director of the IGF Group, which specialises in invoice finance, said the figures should alert the Government that a code of best conduct on late payments was not enough to improve the practices of large corporations, which often abuse their position to pay suppliers late.

“Originally a beacon of hope, the Prompt Payments Code has slowly been eroded by the refusal of larger companies to take it seriously,” she said.

“If nothing changes, the UK economy will find itself in a situation where businesses are unable to take hold of opportunities for growth because they don’t have access to their own money.”

Monday, 17 February 2014 15:40
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