Twice as many firms hit by late payers

Increasingly small firms are being taken for granted by their customers, following research showing the number of entrepreneurs who have not been paid for their services has doubled.

Figures from BACS show six out of ten companies, described as small or mid-sized, have suffered from late or delayed invoices, despite the introduction of legislation to tackle the problem.

Two years ago, just a third of firms reported late payers, when the total amount of money owed to small and mid-sized enterprise was estimated at £11billion.

Today, not only has the number of firms denied timely payment for their services grown, but so too has the value of those payments – now estimated at almost £16billion.

Although lax paying end-clients cause problems for freelance professionals, experts at BACS said the figures include companies employing up to 250 employees.

However regardless of the size of the venture, self-employed outfits emerged as failing to take some basic steps to promote the timely payment of their invoices.

According to the research, 60% of small business owners – and almost four of ten mid-sized firms – omit vital information on their bills, such as bank account details.

For regular clients, BACS suggested taking advantage of automated payments, and though Direct Debit was a preference among entrepreneurs, their clients are typically less keen.

In light of the findings, BACS pledged to step up its ‘Pay Me Direct’ campaign: this is designed to encourage the self employed to emblazon their invoice with a ‘Pay Me Direct’ message, further to clearly spelling out their bank account details.

“Late payments now pose a considerable problem for more than half of all SMEs[small medium enterprises] in Great Britain – if this figure continues to rise, the knock on effect for the UK economy could be disastrous,” said Michael Chambers of BACS.

The group has posted a set of free online materials, to help small suppliers correspond with their clients, in the event payment becomes overdue.

There is also a list of top tips, to head off the prospect of late payment, which BACS group has compiled with the Better Payment Practice Group.

The BPPG recently advisedfreelancers how to reclaim their debts and earn money during the process.

Group secretariat, Bill Barrot said: “Considering the dangers inherent in late payments, it is amazing how many companies do not take precautions to protect themselves. We are committed to improving the payment culture of organisations trading in the UK and have established a Better Payment Practice Code, which urges firms to adopt a responsible attitude to paying on time.”

 

17th November 2006

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