Late payment continues to be an issue that plagues different types of business, but especially Small and Medium Sized Enterprises (SMEs). According to figures published by Bacs in the summer, the total amount owed to both large and small UK businesses stands at c£31 billion, down from c£42 billion this time last year. The SME share of that figure totals c£27 billion, down from c£32 billion in July 2014.
Based on these statistics, the overall value of late payments appears to be falling. Such apparent ‘good news’ is, however, tempered by the fact that some 80 percent of businesses who suffer late payments say that they are being kept waiting one month or longer beyond their agreed terms before being paid.
About a quarter admit that late payments are forcing them to rely on bank overdrafts (24 percent) and a similar number say that late payments are forcing them to pay their own suppliers late (26 percent).
Commercial debt figures from the Credit Services Association (CSA) as part of its Data Gathering Initiative (DGI) add to the story. Gross Commercial Collections for the period April – June 2015 stood at just short of £86 million, a slight increase (circa one percent) on the previous Quarter but almost £12 million more for the commensurate period in 2014. Indeed the figure is almost directly comparable to the amount collected in Q2 of 2013 (c£85 million) and some £19 million up on Q3 2014 when the value was at its lowest.
The figures are especially interesting since while the volume and value of commercial debt placed with CSA members is falling, the amount being collected is on the rise. They are in effect doing more with less. In Q2 2014, members held c563,000 accounts with a value of £1.1 billion. Gross collections for this period was c£74 million. Forward wind 12 months, and c£86 million was collected from just 398,000 accounts with a value of £0.8 billion.
Late payment values may be heading in a downward trajectory, but British businesses appear to be increasing their use of specialist commercial collections agencies to recover money that is rightfully theirs. It will be interesting to track whether these volumes continue to increase in the second half of the year.