North East firms wait much longer to be paid

When it comes to being paid on a timely basis, in the North East, small firms are getting the raw end of the deal while they wait almost two weeks longer than what is the national average for their services and goods according to a set of new figures released.

Statistics from direct credit and direct debit organizations, Bacs showed the SME’s in the North wait up to 52 days beyond agree upon terms to be paid compared to an average in the industry of just 39 days. Over 50% of the firms surveyed had been hit been hit by late payers and 20% employ a special person to chase after past due invoices.

Nevertheless the amount of payments outstanding was lower in the region than other parts at £6bn compared to £10bn in the Midlands that is owed to SMEs and £8.5bn in the south. At any given time 50% of the SMEs in the North are owed at least £25,000 in payments that are late on an equal with those in the south and over £13,000 les that those of the Midlands.

Also a separate research show that the small firms are struggling with loads of red tape they have to go through to maintain themselves on the good side of the law. There are millions being spent on costly complicated regulations for fines and lost revenues. It said over 15% of SMEs did not fully understand the new laws and regulations.

Ten percent had made late VAT payments and about the same number missed tax returns payments and dates with VAT payments being late being almost 15% of the amount due. Gary Lumby of Clydesdale and Yorkshire Banks said that every penny counts in small businesses so by falling foul could mean that a business may not succeed.

In some extreme situations red tape could cause them to close and that is worrying to a large number of small firms because they do not know what to do or whom to turn to. The bank is hoping to change that for its customers. They estimate that about 2% of small businesses have been fined because of not keeping up with the law.