Research by BACS - the direct debit, direct credit and bank payment organisation - reveals that as a group, UK SME’s are owed an astounding £18.6 billion in late payments.
As part of BACS’ annual review it was also revealed that 83% of SME’s never exercise their legal right to charge interest to bad payers.
The Late Payment of Commercial Debts (Interest) Act took effect from 1st November 1998 enacting rights to charge interest to protect business from late payers.
There is a regional disparity though, with 29% of South Western SMEs likely to take action to recover interest whilst the South East businesses are least likely with only half this number taking an ‘interest’ in recovery.
BACS MD, Michael Chambers, commenting on the average £30,000 that each SME is owed, advised: “…encourage suppliers to pay their invoices automatically by BACS direct credit, quote ‘Pay Me Direct’ on all their invoices and make a polite phone-call in advance of invoice due dates to pre-empt payment. SMEs should take advantage of the full legal rights they have been given and start charging interest on overdue payments.”
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