Late Payments sill a major cause for concern for Northern SMEs

RESEARCH by Bacs Payment Schemes Limited (Bacs), the organisation behind Direct Debit and Bacs Direct Credit, has revealed that SMEs in the North have to wait an average of 35 days longer than their original agreed payment terms, before invoices are paid.

Although this is a drop of 1.4 days on the time Northern SMEs were waiting, beyond agreed deadlines, in June of 2009 (36.4 days), and is contributing to considerable cash flow issues for many of them.

Michael Chambers, managing director of Bacs, said:- “Small businesses rely on receiving payments on time so that they can maintain cash flow and ensure the business can run on a day-to-day basis. Our research highlights the continued widespread nature and real impact of the late payment problem, which was affecting 236,000 SMEs in the North in December last year.”

Bacs’ research shows that large companies are the main late payments culprits, with 38% of Northern SMEs citing them as the worst offenders. However, 16% of respondents pointed the finger at fellow SMEs, with a further 13% blaming sole traders. 4% of Northern SMEs cited not-for-profit organisations and government as the worst payers, suggesting that the pledge made in the 2010 Budget, that government departments will pay 80% of invoices within five days rather than the usual 30, will be a challenge to meet.

Cash flow remains the most common reason for overdue payments, with 33% of Northern SMEs saying it was the main reason given by customers for paying late (down 2% on June 2009). 3% of SMEs in the North said their customers blamed the economic downturn for payments being late (static from June 2009) and a further 3% said that being paid late had a knock on affect on their ability to make their own payments. 7% of respondents were told by customers that they had simple forgotten about the invoice, while 1% were given the reason that ‘the cheque is in the post’, an excuse soon to be obsolete with the UK Payments Council’s plans to phase cheques out by 2018.

Chambers said:- “SMEs need to be proactive in improving their payment collection processes. Accurate, efficient and prompt invoicing, which clearly states the agreed payment terms, is a must. 86% of British SMEs receive cheques as payment and 84% make payments by cheque, and with cheques soon to be a thing of the past, businesses should be encouraging payment direct into bank accounts, using payment mechanisms such as Bacs Direct Credit.”

Although a huge number of SMEs are experiencing late payment of invoices, Bacs’ research reveals some encouraging signs of change, with the total amount owed to Northern SMEs decreasing from £7.1 billion in June 2009 to £6.8 billion in December 2009. The number of Northern SMEs affected also fell from 295,000 in June 2009 to 236,000 in December 2009. However, the average amount owed grew from £24,000 in June 2009 to £29,000 in December 2009.

Phil McCabe, spokesperson for the Forum of Private Business (FPB), said:- “Late payment is a huge problem for small businesses and it’s highly disappointing to hear that small firms are having to wait even longer to be paid. Late payment is frequently cited as the number one problem facing our members, eclipsing even taxation and regulation. With its damaging impact on a company’s cashflow, it can cause a perfectly viable and successful firm to fold. We welcome Bacs’ work to highlight this problem and hope it will increase the pressure on late payers to change their ways.”

Key late payment statistics for the North, December 2009:-

► 35 days – the average time beyond the agreed payment date that Northern SMEs have to wait until they are paid, a drop of 1.4 days on June 2009. The North is however fairing better than its counterparts in the Midlands and South, where SMEs are waiting an average of 42.5 days (up 18 days on June 2009) and 43.7 (up 9.1 days on June 2009) beyond agreed deadlines for payments respectively.

► 236,000 – the number of Northern SMEs impacted by late payments in December 2009

► £6.8 billion – the total amount owing to Northern SMEs at any one time in late payments

► £29,000 – the average amount each Northern SME is owed in late payments at any one time (up from £24,000 in June 2009), and higher than SMEs in the Midlands and South (£23,000 and £24,000 respectively)

► 33% - stated cash flow as the main reason given for late payment (down 2% on June 2009)

► 3% - blamed the economic downturn for late payments (static from June 2009)

► 1% - said the cheque is in the post

► 38% - stated larger companies are the biggest culprits of late payments owed to them

► 13% - cited sole traders as being the worst late payment offenders

► 16% - cited SMEs as being the worst late payment offenders

► 4% - of respondents cited the government and not-for-profit organisations as responsible for late payments

► 51% - the number of Northern SMEs that have experienced an issue with late payments, down from 64% in June 2009

For more information about late payments and how to tackle them head on, visit:- paymedirect.co.uk where Bacs has developed a series of hints and tips for encouraging prompt payment.

QUICK THINKING OFFICERS SAVE RESIDENTS FROM FIRE

RESIDENTS in a block of flats in Lathom Road, Southport had a lucky escape from a fire on Wednesday, 7 April 2010, thanks to the quick-thinking actions of Merseyside police officers.  PCSO Trevor Veamcomb had been making a community visit when he and a tenant noticed the fire in a ground floor flat at around 7pm and called for assistance as well as notifying Merseyside Fire Service.  On arrival, five officers from Merseyside Police assisted to alert the occupants of the 14 apartments. In the process of evacuating the residents the officers suffered smoke inhalation and were taken to hospital. All have since been discharged.

Chief Superintendent Ian Pilling, Sefton Area Commander, said:- "The actions of constables Adam Phillips, Neil Davies, Steve McCormack, Laura Holt and James Evans as well as PCSO Trevor Vearncomb go above and beyond the call of duty. It is sometimes easy to forget that officers regularly find themselves in difficult and sometimes dangerous situations, putting public safety before their own. Incidents like this go a long way to highlight the high degree of professionalism that I, and my colleagues, see on a daily basis and I am very proud of my officers whose actions may well have been instrumental in saving lives in the fire yesterday."

Merseyside Fire Service crews attended the block of flats on Lathom Road and extinguished the kitchen fire as well as conducting a full search of the property.  Station Manager Rob Taylor said:- “Thanks to the officers' actions, the residents managed to get out unharmed. They realized the danger and did exactly the right thing - they raised the alarm and alerted everyone in the building to make sure they got out safely.”

Winners at the Latin Lounge, Southport

SOUTHPORT'S Latin Lounge has only just re-opened and has played host to members of local betting shops and their clients on 10 April 2010, screening the Grand National. These are a few of the winners, who attended the bar to watch the race.

GUIDE DOGS FOR THE BLIND ASSOCIATION CALENDER

MERSEYSIDE Police's Dog Section was proud to present the Guide Dogs for the Blind Association a cheque for £4,645, the proceeds from the Dog Section 2010 Charity Calendar.  The calendar featured some of the Force's canine recruits, including Spaniels, Sadie and Luke, who are specially trained drug detection dogs and veteran dog Ashley the Labrador.  Inspector Neil Davies, Head the Force's Dog Section said:- "The Guide for the Blind Association is an extremely worthwhile cause. I am pleased that through the excellent sales of this calendar, we are able to support this charity. This money will contribute to the excellent work that the organisation does, helping some 21,000 blind and partially sighted people across the UK."

WITNESS APPEAL - ARSON, PG COACHES, SPENCER LANE, WADDICAR

MERSEYSIDE Police are appealing for information following a suspected arson at a coach company in Waddicar in the early hours of Tuesday, 13 April 2010.  Officers were called to PG Coaches in Spencer Lane shortly after 4.10am following reports that four coaches were on fire. On arrival, a witness told officers that he had seen up to three people leave the scene on foot in the direction of the Horse and Jockey pub.  A search of the area was made but the offenders were not found. Residents in Ledsons Grove and Canal View were advised to leave their homes due to their proximity to the fire.  Mersey Fire and Rescue Service attended the scene and put the fire out. Extensive damage was caused to four coaches and the plastic guttering and fence at the back of a house on The Potteries was damaged by the heat.  At this early stage of the investigation the cause of the fire has not been established however detectives are treating the incident as suspicious.  Officers are appealing for anyone who saw anything suspicious in the area at around that time to call police. In particular they would like to hear from anyone who remembers seeing three youths in their mid to late teens, dressed in black, walking towards Spencer Lane at around 4am. Anyone with information is asked to call Sefton CID on:- 0151 777 6010 or leave information anonymously via Crimestoppers on:- 0800 555 111.