SMEs 'owed £25.9 billion in overdue payments'

Small-to-medium-sized enterprises (SMEs) are owed £25.9 billion in overdue payments, according to payment clearing service Bacs.

Latest Bacs research found that the amount owed has risen almost 40% in the last year, up from £18.6 billion in 2008.

Bacs said that almost six in every 10 SMEs are now owed outstanding monies, with companies waiting an average of 41.5 days beyond agreed payment terms for invoices to be settled.

Manufacturing was found to be the worst-hit industry, with almost two-thirds (65%) of SMEs experiencing a delay, followed by 53% in the service industry.

Michael Chambers, managing director of Bacs, said that businesses should demand shorter payment terms and to be paid directly into bank accounts to avoid "cheque-in-the-post excuses".

Phil McCabe, spokesman for the Forum of Private Business (FPB) said: "Late payment and bad debt are the scourge of business owners. Often, they are major factors behind businesses being forced to close.

"The amount of money owed to small firms has soared over the past year as big businesses seek to create credit lines for themselves by squeezing their suppliers."