Small businesses 'owed £30 billion' in late payments

Small and medium firms in Britain are now owed £30.4 billion in late payments, according to Bacs.

Research conducted by the bank payments clearing service suggests that the total amount owed to SMEs has grown by more than £11 billion over two years, having risen from £18.6 billion at the end of 2007.

In a survey of 453 SMEs, the proportion reporting payment delays had grown by more than 65% compared to a similar poll last year, and now equates to more than one million British businesses. However, the average amount owed to each SME at any one time has fallen, from £38,000 to £28,000.

By industry, SMEs in the service sector have the largest combined late payment bill, which Bacs calculates is worth £16.6 billion nationwide. The distribution sector is owed £9.5 billion, and the manufacturing industry a further £4.5 billion.

Over half (52%) of SMEs said that late payment would force them to settle their own debts later.

Michael Chambers, managing director of Bacs, said: "We must actively work to break this cycle of late payments to help businesses survive through these challenging times.

"We encourage SMEs who are experiencing late payment difficulties to visit www.paymedirect.co.uk for guidance and advice on avoiding payment problems."