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Small businesses are owed almost £40bn as a result of late payments, according to Bacs Payment Schemes, the direct debit company.
Bacs estimates that 60% of SMEs now experience late payments, with the average company waiting for £38,186 in overdue invoices.
One in four small businesses said that if the amount it was owed grew to £50,000, it would be enough to send it into bankruptcy. A quarter also said they spent more than 10 hours a week chasing overdue bills.
Almost two-thirds (63%) of businesses in the services sector, which includes recruitment, were likely to be impacted by late payment, said Bacs.
The Government has pledged to legislate on late payment through its Small Business, Enterprise and Employment Bill and has issued a consultation, entitled ‘Building a responsible payment culture’. The first part of the response has been published and it is now in its second phase.
Members of recruitment industry body APSCo met earlier this month to provide their response to the proposed legislation, looking at ideas for ensuring fair and transparent payment terms throughout the recruitment supply chain.
Laurence Ridgway, senior policy adviser at the Department of Business, Innovation and Skills (BIS), joined members to discuss their concerns.
Samantha Hurley, head of external relations and compliance at APSCo said: “We are very pleased that BIS has taken the time to engage with our members directly on this very important issue – and that they recognise that the need to have a sector-based approach.”
“We were particularly pleased that BIS said that they would like companies to link to sector based codes such as the APSCode– a code of conduct for RPO and MSP members which addresses some payment culture issues – in particular pay when paid clauses and non-assignment of debt.”
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