The amount of money owed to small and medium-sized enterprises (SMEs) has risen to £39.4 billion, according to data published by direct debit company, Bacs Payment Schemes.
This figure is up from £30 billion the same time last year and has now surpassed the previous peak in 2012 of £37 billion.
Larger companies are only owed £6.7 billion at any time. In comparison, 60% of SMEs are now experiencing late payments, with the average company owed £38,186.
25% of SMEs said that outstanding debts of just £50,000 would be enough to send their company into bankruptcy.
Mike Cherry, national policy chairman at the Federation of Small Businesses, said:
“These latest figures are a further reminder of the major headache caused by late payments. Not paying on time and lengthy terms can have a seriously detrimental impact on small firms.”
The government is attempting to push through legislation that will force companies to publish information about their payment terms, hoping this might shame big businesses into paying on time.
More than 1,500 companies have also signed a ‘voluntary late payment code’, which could involve an online review system for late payers.
Mr Cherry added:
“The prompt payment code needs to have more power and authority to help the smaller firms. For example, ensuring the largest businesses spell out their payment terms. The EU late payment directive is very clear that if payment terms exceed 60 days, they must explain why.”
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