Fifty-six per cent of suppliers to UK manufacturers are waiting for nearly eight weeks to receive payment.
In a survey published by Bacs Payment Schemes, large companies were identified as the worst payers.
The SMEs supplying the manufacturing industry are owed around £40,000 each, totalling £9.7 billion in overdue payments for the sector.
Mike Hutchinson from Bacs said: “Just short of a million of the country’s smaller companies are facing a late payments burden, with potentially serious implications for their business.”
Although the survey reveals that manufacturing is being hit hard by late invoice settlement, it is not alone as nationally the total owed to SMEs has topped £30 billion with the average business waiting for £31,000 in overdue payments.
The survey also shows a gaping north–south divide, too. SMEs in the north of the country say they’re owed an average of £39,000, almost double that of southern businesses, where the average is £23,000.
When chasing late payment, almost one in five SMEs (18%) were simply told the customer had either forgotten to pay or just hadn’t got around to settling the bill.
Hutchinson continued: “Waiting eight working weeks after a payment is due before receiving the money could be catastrophic for vulnerable companies, particularly at a time when the economy is struggling and cash flow is key.”
TM covered the growing concern of many SMEs here.