SMEs owed £2.5bn of late payment

British SMEs are owed £2.5bn because customers and suppliers have failed to pay on time, new data has revealed.

Barclays Local Business annual Late Payments report has revealed on a typical day construction businesses across England and Wales are almost £3,000 out of pocket as a result of suppliers or customers failing to pay within the standard 30-day invoicing period.

This has resulted in these SMEs losing almost £1.1bn over the last 12 months as a result of non-payments, an average of around £1,200 per business.

John Davis, marketing director for Barclays Local Business said: “Despite some recent positive economic signs, it's concerning that late payments are on the rise. This is a serious issue for the construction firms we talked to - four in 10 [41%] say it threatens their day-to-day survival.”

Firms typically have to wait almost a fortnight after the invoice due date before they get paid.

Barclays Late Payments report also found 65% of construction firms believe the problem will continue to get worse over the next 12 months.

Meanwhile 42% of construction businesses have borrowed money in a loan or overdraft to improve cash flow as a result of being paid late, and firms spend on average 1.4 hours a day chasing late payments.