Debt tops £30bn in 2013

Daniel Liberto

According to data revealed during a European Commission seminar on the application of a new directive to tackle problems of late payments, 85 per cent of UK SMEs suffered from a trend that has “considerably” worsened since the financial recession.

The data revealed that the current average waiting period for payments was 41 days and that SMEs were owed £30.2bn in 2013, which was almost double the amount unpaid in 2007 and mostly blamed on the recession and reduced liquidity.

Priya Ramdas of the department for business, innovation and skills, who gave a speech at the seminar, said the UK government had consulted on how to limit this growing issue with the potential for technology, like electronic invoicing, being explored.

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She said: “Late payment in business-to-business transactions has worsened considerably since the financial crisis, though there has been some improvement over the past year.

“The UK Government recently consulted on what could be done to build a responsible payment culture looking at a wide range of legislative and non-legislative options. We are currently analysing over 130 responses which will inform what we do next.”

Sage Pay, the payment service provider, previously reported that the average UK SME was owed £11,358 and one in five more than £30,000 because of the “antiquated” use of paper invoices.

Adviser comment

Wayne Clark, owner of Peterborough-based Heartstone Financial Services, said: “I have never really had this problem because I have always made sure to be clear with clients beforehand. In all the years of being on our own we have only had one case when a client did not immediately pay up. If you make it absolutely clear and get them to sign an agreement then it should be fine.”