9th April 2008
SMEs 'owed £18.6billion'
Small-to-medium sized enterprises (SMEs) are owed an estimated £18.6 billion in outstanding payments, according to the bank payments clearing service Bacs.
Ongoing Bacs research has found that 83% of SMEs in Britain are not exercising their right to charge interest on late payments, and that the typical SME is owed an average of £30,000 at any one time.
Only 15% of those surveyed said that they had claimed interest on overdue business payments, despite the introduction nearly a decade ago of legislation to protect SMEs from the problem.
The Late Payment of Commercial Debts (Interest) Act, brought into effect on 1 November 1998, provides SMEs with the statutory right to charge interest on overdue invoices.
"SMEs shouldn't just sit there and expect to be paid on time," said Bacs managing director Michael Chambers. "They should encourage suppliers to pay their invoices automatically using Bacs Direct Credit, quote 'Pay me Direct' on all their invoices and make a polite phone call in advance of invoice due dates to pre-empt payment.
"If, after all these steps have been followed, companies still fail to meet agreed payment conditions then SMEs should take advantage of the full legal rights they have been given and start charging interest on overdue payments."
Ongoing Bacs research has found that 83% of SMEs in Britain are not exercising their right to charge interest on late payments, and that the typical SME is owed an average of £30,000 at any one time.
Only 15% of those surveyed said that they had claimed interest on overdue business payments, despite the introduction nearly a decade ago of legislation to protect SMEs from the problem.
The Late Payment of Commercial Debts (Interest) Act, brought into effect on 1 November 1998, provides SMEs with the statutory right to charge interest on overdue invoices.
"SMEs shouldn't just sit there and expect to be paid on time," said Bacs managing director Michael Chambers. "They should encourage suppliers to pay their invoices automatically using Bacs Direct Credit, quote 'Pay me Direct' on all their invoices and make a polite phone call in advance of invoice due dates to pre-empt payment.
"If, after all these steps have been followed, companies still fail to meet agreed payment conditions then SMEs should take advantage of the full legal rights they have been given and start charging interest on overdue payments."
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