Large companies across Scotland and the UK are being urged to sign up to a prompt payment code, after it was revealed that they collectively owe small-sized companies more than £35 billion.
The sizeable figure, made up of unpaid invoices, has been released following research by Bacs Payment Schemes. The company, which handles Direct Debit payments, revealed that a total of £35.2 billion is now owed to small firms – an increase of £2 billion since June 2011.
Breaking down the findings, the typical small-sized company is now owed £45,000 in outstanding payments.
With so many firms struggling amid cuts in public spending, reduced consumer spending and difficulties in accessing commercial finance in Scotland, it simply adds more pressure to cash flow.
The bill total of £35.3 billion is £2 billon higher than the figure last reported in June.
The Federation of Small Businesses (FSB) is “enraged” by the findings and is lobbying for both the Scottish and UK governments to address the issue. The Scottish policy convenor for the FSB, Andy Willox said:
“We’ve long argued that government in Edinburgh and London needs to better understand the pressure big corporates often put their supply chain under (and) enforcing sub-contract payment clauses on large public contracts seems like a good place to start.”
The Bacs research shows that 785,000 SMEs are contending with late payments. This figure would likely be higher, but many are now using invoice factoring to unlock cash flow.
The average wait for payment for those not using such services is now nearly 30 days more than the defined payment terms.