The UK SME late payment debt has risen to a staggering £23.4 billion, up £10.4 billion on the £13 billion owed in 2018 - according to figures released by Pay.UK, which runs the Bacs Direct Credit and Direct Debit payment services.
UK SMEs are spending £4.4 billion a year, just to collect money they are owed!
A quarter 22% of all UK SME’s are spending more than £500 a month chasing payments!
The average late payment debt burden has also increased to £25,000 per company, up from just over £17,000 in 2018, with SMEs reporting that, on average, a debt burden of £35,000 could jeopardise their business. The research also reveals that 13 per cent of SMEs experiencing late payments struggle to pay their business bills, 12 per cent have difficulties paying their own staff on time, and 10 per cent have to rely on invoice financing to draw cash into their businesses.
These are incredible numbers, and IFAs and MGI firms should take note that they work in an industry almost devoid of creditor problems. You have the best creditors in the land – banks and insurance companies pay their dues, - not so in the rough and tumble world of ordinary commerce not wrapped in the cotton wool of regulation.
Furthermore your industry is basically VAT exempt. So no problems with vat reclaims and the associated account reconciliation issues. It is a fantastic advantage for you, and you should note this before throwing the white towel into the ring. IFAC, for instance, sends one fifth of their revenue (sorry, your revenue) to the HMRC each quarter, in the name of VAT. Our revenue is vatable, our expenses are salaries and largely vat free, collected from not vatable customers.
But you should also be aware that IFAC help over 300 small shopkeepers, online retailers and plumbers with their FCA returns. Their own accounts are – as a general rule - more organised than the average IFA/MGI firm, with sophisticated systems used to account for every cent as it comes in.
Times may be tough for Investment industry, but it’s not easy climate to thrive in at present –a post credit crunch socialist Britain – but you’re in a fantastic industry with many advantages over the “riff-raff” of other trades. Let’s keep it that way.