The average UK small company is now owed £39,000, according to the fourth annual survey by Bacs (Bankers' Automated Clearing Services). The data shows that businesses are owed on average 10% more than last year.
What’s more, those hit by late payment are waiting on average 28 days above their payment terms to have invoices settled. The Bacs survey found that the most frequent excuse businesses hear is that payment is held-up due to internal systems – 55% or respondents said they were told their invoice is waiting for authorisation or that the bill is being processed by accounts.
However, with EU Late Payment legislation set to be introduced in the UK in 2012 – a year earlier than originally planned – it will be interesting to see if this reduces the burden of overdue payments on businesses. If small companies start to use the EU legislation to levy penalties and interest on overdue payments, it may well force a change in payment practice – with companies needing better visibility and control over their payment processes in order to avoid such penalties.
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