More than £62bn now owed in overdue invoices

More than £62 billion is now owed in overdue invoices in the UK, according to new research by NatWest and Royal Bank of Scotland.

The survey shows that 71% of SMEs in the UK have suffered because of late payments. Larger companies may have a higher value of invoices paid late but in terms of proportion of turnover, it is the smaller firms that are worst affected.

Approximately 1 in 5 businesses with an annual turnover of between £250,000 and £500,000 has suffered compared with just 1 in 15 larger companies.

Peter Ibbetson, Chairman of Small Business, NatWest and RBS, said: "The reality for most small businesses is that they are too busy to spend time chasing payment and managing debtors.”

A total of 235,000 SMEs say that the time they have spent chasing debts has had an adverse effect on their business yet less than half have take action to deal with the problem.

This is unfortunate because some simple steps can often lead to early settlement. For example, a solicitor’s letter will often be enough to secure payment because people realise you are serious and they don’t want to run the risk of court action.

Firms should also be aware that they are entitled to levy statutory late payment fees and impose punitive interest charges. Taken together, this can earn more than enough to pay any legal fees involved and turn credit control into a profit making operation.

Please contact us for more information and advice on how you can ensure prompt settlement of overdue invoices.

 

July 2010

The views expressed in this article are those of the article contributors, for which Judge & Priestley LLP accepts no responsibility. Readers should take appropriate legal advice before acting on any issues raised