SMEs continue to tighten up their late-payment prevention methods as they give up hoping for government help in tackling the problem.
This is the claim by automated payment processing giant Bacs, which questioned 477 financial directors, managing directors or owners of UK SMEs on the sensitive issue.
The total amount owed to SMEs has increased by a whopping £600m this year to £24.6bn compared to December 2009, with the average amount owed increasing 28 per cent to £32,000, compared with £25,000 last year.
But despite the increase in the amount owed, the number of SMEs suffering as a result of late payments has dropped to 769,000 from 961,000 last December, according to Bacs.
The average length of time beyond agreed terms that SMEs are waiting is 39.4 days, down from 41 days last year.
Interestingly 56 per cent of respondents do not expect the government to take action on late payments and 37 per cent blamed larger companies as the worst culprits of late payments. Twenty six per cent ask for payment on receipt of invoice, and 48 per cent ask for payment 30 days/end of month after receipt of invoice.
Mike Hutchinson, head of marketing at Bacs, said: "It is heartening to see that there are many companies making great strides to help themselves beat the late payments cycle, by sharpening up their billing and credit control procedures."
Despite cheque clearing facilities set to be phased out by 2018, 79 per cent of SMEs continue to use cheques to pay their bills, with 76 per cent still receiving payment by cheque.
Hutchinson said SMEs should consider replacing the use of cheques with automated payment methods "sooner rather than later".
"Automated payments offer many benefits in streamlining processes and helping cash flow, which companies can take advantage of now to help combat late payments," he claimed.
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