The latest research from Bacs Payment schemes has shown that the outstanding debts to UK SMEs have reached a record high of £35.3 billion. The research also shows that SMEs are waiting longer for outstanding invoices to be paid although the number actually experiencing late payment has fallen.
Ironically it seems to be the big businesses that are the worst payers and the ones that make SMEs wait for their money. Other SMEs, individuals and government departments tend to be much more prompt in settling their accounts. The chief executive of the Institute of Credit Management, Philip King, said that it is not surprising that the amount and number of late payments is on the increase.
The government is currently prioritizing late payment and trying to find a solution to solve the problem for SMEs. It is doing this through the Department of Business, Innovation and Skills. Part of the solution is the Prompt Payment Code which firms can sign up to but at the moment are not obliged to.
Mr. King said that more must be done about bigger companies not paying their bills promptly and that they should be made to sign up to the Prompt Payment Code. He also said that the government should take a lead in this area and not award any public sector contracts to companies who are not signed up to the PPC. He added that this would show that the government is really committed to doing something about the problem.
Bacs was founded in 1968 and is a non-profit making, membership-based industry body. It is responsible for clearing and settling automated payments in the UK which include Bacs Direct Credit and Direct Debit. Bacs is owned by sixteen of the top banks and building societies in the US, the UK and Europe.