The total amount owed to SMEs in the UK via outstanding invoices has been placed at an estimated £212 billion in a survey by e-invoicing network Tungsten.
Of the 1,000 SMEs surveyed, 23% said they have faced closure in the past due to late payment – and this figure was even higher in some industries, reaching a high of 32% in the technology sector.
An average UK SME is owed £40,857 in outstanding invoices at any one time, with £20,937 – just over half of the total – overdue.
With 5.2 million SMEs up and down the country, that leads to an estimated £212 billion in outstanding SME invoices at any one time, and over £108 billion of late payments.
That overdue figure is very high compared with other reports, which typically put the figure at closer to the £40 billion mark, but either way it is clear that very large sums of money are simply not being paid on time.
Richard Hurwitz, CEO of Tungsten, said: “These figures are a telling reminder of the challenges faced by SMEs in this country.
“An unpaid invoice can mean the difference between a successful month of trading and a dangerous financial shortfall. In the worst case it could lead to insolvency.”
For debtors, you might argue that good credit control practices mean only paying invoices on the day they are due.
However, Tungsten found that in some cases, debtors do this only to find on the deadline day that an important piece of information is missing from the original invoice, leading to delays and overdue payments.
The problem of late payment still seems most acute among larger firms, with 22% saying they are the worst culprits; however, 11% blamed medium-sized firms, 8% blamed the public sector, and 33% said there is no obvious pattern to who pays on time and who pays late.
Good credit control practices are one way to keep some power over your payments – ensuring that invoices contain all of the required information, and that debtors are issued with regular reminders ahead of deadline day, so there can be no excuses for non-payment when the time comes.
If you found this article helpful we would recommend reading our previous blog, SMEs Suffer due to ‘Behavioural Late Payment’.
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