Late payments owed to small firms hits £7.3bn

THE amount of money owed to small businesses in Scotland and the north of England has risen by 7 per cent in the past six months to £7.3 billion, according to new figures.

More than half of small firms pointed the finger at larger companies as being the worst culprits, with the average total for outstanding payments to SMEs rising from 29,000 in December to 57,000 in June.

But the percentage of firms affected by late payments fell from 51 per cent to 27 per cent.

Mike Hutchinson, head of marketing at the Bankers' Automated Clearing Service (Bacs), which compiled the data, said the fall was largely due to the individual companies' efforts.

He added: "It's extremely heartening to see many northern companies making great strides to help themselves beat the late payments cycle, by sharpening up their billing and credit control procedures."

Hutchinson said 24 per cent of firms now ask for payment on receipt of an invoice, while a further 48 per cent gave customers 30 days to pay their bills.

Scottish and northern English businesses - combined in the survey - said the average number of days payments were overdue had fallen from 35 to 31, while the UK average fell from 41 to 39. The survey showed that nearly two-thirds of small businesses not anticipate any assistance from the UK government in tackling late-payment issues.

But only 3 per cent of "northern" firms reported late payments from government bodies.