Small and medium sized enterprises (SMEs) in the distribution sector are forced to wait a staggering 50 days beyond agreed terms before they are paid – 10 days more than the national average, according to research from Bacs, the organisation behind Direct Debit and Bacs Direct Credit.
In contrast, service sector SMEs wait just 33 days beyond agreed terms, and those in manufacturing an average of 41 days before they are paid.
Bacs’ latest research reveals that, out of the national late payments debt of £24bn, distribution SMEs are owed a massive £7.9bn, with individual companies claiming an average of £39,000 each in overdue invoices. This is £5,000 more than their manufacturing counterparts (£34,000) and more than double that experienced by service sector SMEs (£18,000).
Over half (53%) of distribution SMEs have experienced late payments and nearly a third now employ a dedicated member of staff to chase payments. On average, that person spends more than half a day each week following up on overdue payments, equating to approximately 48 million¹ staff hours every year.
Mike Hutchinson, head of marketing at Bacs, said: "Late payment remains a big problem for British SMEs with £billions overdue against bills – and that hefty financial burden is increased even more as small businesses have to pay out for millions of man hours to chase invoice payment. This cultural habit of leaving payment as late as possible must be broken but, until that happens, we urge SMEs to consider turning to automated payments wherever they can to effectively manage the money which is under their control."
For more information about late payments and advice on how to tackle them, visit www.paymedirect.co.uk