Small and medium-sized suppliers in the UK’s retail and distribution sector are being kept waiting up to eight weeks for payments, a new study has suggested.
Fifty-nine percent of SMEs in the sector reported being kept waiting for over 37 working days – or almost eight working weeks – the figures from Bacs Payment Schemes revealed.
The research found that retail industry suppliers were each owed around £43,000 on average – a total of £12.3bn in overdue payments for the sector. In addition, there was a large north-south divide, with SMEs in the north owed an average of £39,000 compared with £23,000 in the south.
Mike Hutchinson, head of marketing at Bacs, said: “Waiting eight working weeks after a payment is due before receiving the money could be catastrophic for vulnerable companies, particularly at a time when the economy is struggling and cash flow is key.
“We urge SMEs to look at where they can assert some control, automating payments wherever possible to save valuable time and administration costs, and remove some of the stress on the business and its owner.”
The survey, of 481 SMEs in the UK, found that the most commonly given excuse for late payments was that the customer had either forgotten to pay, or had not got round to settling the bill.
Of those company owners surveyed, 23% reported feeling worried about overdue payments, while 41% said they were concerned about the impact these debts could have on their business.
Bacs is the not-for-profit industry body that is responsible for automated payments systems such as Direct Debit in the UK.