Almost three out of every four SMEs has been affected by late payments that occurred over the course of 2009, but less than half of them have actually taken any steps to reduce the pressure of their occurrence, according to research from NatWest and its parent company the Royal Bank of Scotland.
The research included numbers from 500 companies, out of which, there are a total of £15.7b of invoices that are over 120 days in arrears. Banks estimate that 235,000 of SMEs are still wasting their time chasing invoices that are overdue, which is the largest problem for wholesalers; out of which 93% have faced lengthy delays. Retailers on the other hand have had a better outlook with only 66% faced with late payments.
Additional Barclay’s research that is based on data compiled from 1,000 companies suggests that some SMEs are taking active steps in order to reduce the cash flow pressure by writing off large amounts of debts. In fact, about 720,000 SMEs wrote off on average about £2,529 in debts in 2009 which is almost double than the amount that was written off in 2008.
The two companies also estimate that fewer than half of all SMEs have actually taken action to combat the debt with only about 11% choosing to hire an in-house credit controller, 8% factoring, and 9% to start using invoice discounting in order to each the pressure from cash flow problems that are caused by owed debts.