Research conducted by Bacs, the organisation behind Direct Debit, shows that small to medium sized manufacturers are affected the most by late Direct Debit payments.
The problem is so acute that nearly a third of small to medium sized enterprises (SMEs) in the manufacturing industry employ a member of staff just to chase up late payments from customers.
The total debt is estimated by Bacs to total £24bn, with manufacturing SMEs owed £8.9bn in overdue invoices. On average, manufacturing SMEs have overdue debts of £34,000, while service sector debt averaged at £18,000.
The study found that 63% of manufacturing SMEs have experienced late payments – 10% more than the national average. Mike Hutchinson, head of marketing at Bacs, said: “[This] hefty financial burden is increased even more as small businesses have to pay out for millions of man hours to chase invoice payment. This cultural habit of leaving payment as late as possible must be broken but, until that happens, we urge SMEs to consider turning to automated payments wherever they can to effectively manage the money which is under their control.”
Founded in 1968, Bacs, the not-for-profit, membership-based industry body is owned by 16 of the leading banks and building societies in the UK, Europe and the US.