Small businesses: The scourge of late payments

The hunt is on for the person who can solve the late-payments crisis threatening Britain’s small and medium-sized enterprise.

The hunt is on for the person who can solve the late-payments crisis threatening Britain's small and medium-sized enterprise (SMEs). Applications for the post of small business commissioner close next week, with a £130,000 salary on offer for the right candidate. The appointee is scheduled to be announced in late June, two years after plans for the role were first unveiled by ministers, meaning that nobody can accuse the government of rushing the process. Yet the need for a new approach to what the Department for Business's advertisement for the job describes as "the scourge of late payment" is as great as ever.

Data from Bacs, the organisation that runs the banking payments system, suggests 47% of SMEs are routinely paid late by their customers. The average small business is owed £32,185 in late payments according to the research the equivalent of £26.3bn across the UK as a whole. The effects can be devastating. A third of SMEs say they have no choice but to settle their own bills late because customers aren't paying on time. A fifth warn their future is threatened, with late payments causing severe cash-flow problems. Many more are prevented from investing for future growth.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.