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£36.4bn owed in late payments

01/10/2012

UK businesses’ late payment woes continued during the first half of the year as the amount owed to companies in outstanding payments reached £36.4 billion.

The issue has been a major feature of the economy’s plight, but these latest figures from Bacs Payment Schemes puts it into context. The average business is now owed a shocking £36,000, with 35% reporting only £20,000 in late payments would be enough to put them out of business.

This not only demonstrates the cash flow challenges facing businesses at present, but also the threat posed to the asset based finance industry. Fortunately the anticipated escalation in corporate insolvencies is yet to materialise, but it could only be a matter of time until the tipping point is reached.

With the average invoice now being paid 43.4 days beyond agreed terms, it is clear just how important invoice finance could be to so many of the nation’s SMEs at present. Almost half (47%) say the most common excuse they receive for late payment is that their customers are suffering cash flow problems of their own.