The number of county court judgements brought by SMEs increased by 23 per cent from the first to the second half of 2015, with the average amount pursued £4,619.
It’s a significant amount of money for a small business to be chasing, and can have a knock on effect to a business’ suppliers.
The company that collated the data, Ormsby Street, discovered that many of their customers were struggling to receive payment for services, even after a 30 day payment period had been reached.
14 per cent of UK SMEs see late payments of invoices as their biggest challenge, and almost half of them wait more than 30 days for payment. The average waiting time is around 40 days.
Larger SMEs seem to be more exposed to the issue of late payments, with 65 per cent waiting for over 30 days.
Aggregate Industries has made business headlines due to a row with the Forum of Private Business (FPB) over claims that it has taken over 90 days to settle bills.
Tesco has also come under fire for not paying suppliers and asking for price cuts. The Groceries Code Adjudicator has now said that Tesco “knowingly delayed paying money to suppliers in order to improve its own financial position”.
There has been an increase in court cases chasing debts owed to SMEs due to the increase in companies speaking out against poor payment practices. The Government has proposed the appointment of a Small Business Commissioner which should be able to help SMEs.