February 20 2015
A new report by electronic payment service BACS has found that small and medium sized enterprises have additional costs directly associated with late payments that average £677 a month. Most of these costs are administration time spent chasing customers for payment. The authors estimate that this represents total costs to the economy of £8.3bn a year.
The knock on effect of this is that many small businesses have to make difficult decisions to get through the month. 20% of directors in small businesses that experience late payments say that they have taken a cut in salary to have enough cash in the business.
Other challenges that result include having to use overdrafts to make ends meet, difficulties in paying staff on time, factoring invoices and difficulties paying regular bills. Many claim that a late payment situation forces them to pay their own suppliers late, the problem just propagates down the supply chain.
Samantha White, CEO of My Credit Controllers said:
"This report shows the very real costs that late payments impose on SMEs. If you are experiencing problems with late payers why not let My Credit Controllers take the strain? We can add our charges and also late payment interest to the overdue debt, so there's no cost at all to your business."
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