Late payment deficits are on the increase, a survey has found, with small businesses in the UK owed £8.3bn..
The survey, by Barclays Local Business, found that on average, small businesses are owed more than £2,000 in late payments, with around 1.5 million saying they employ someone specifically for the purpose of chasing up outstanding debts.
Nearly six in ten have problems with late payment, with a third adding the issue threatens their business.
Almost 40% of business owners said they are using their own money to keep their businesses afloat while they wait for payments, with 60% added they felt they are wasting valuable resources chasing debts.
The survey also found that on average, businesses spend more than an hour a day chasing up late payments – which equates to more than 4 million wasted hours, or 544,640 working days.
John Davis, marketing director for Barclays Local Business, said the fact that small businesses are facing such large deficits is ‘extremely worrying’.
“A regular and reliable cashflow is essential to the smooth, day to day running of a business – particularly a smaller one,” he said.
“The majority of small businesses cannot afford to wait on money they are owed without feeling the impact on their bottom line.”
He added that chasing up late payments is a ‘massive drain’ on organisations, and can be particularly damaging in a ‘challenging economic environment’.
“Chasing late payments is an extra burden which small business owners can well do without.
“Winning new business, driving sales, and fulfilling customer demands are ultimately what should make or break an organisation – clearly a manager’s time is better spent on these tasks, rather than making endless phone calls to late payers,” he said.
© Crimson Business Ltd. 2008
