Late payments are causing significant problems for small and medium sized manufacturing businesses.
According to a new independent survey by GMAC Commercial Finance, companies are spending, in total, 148,830 hours each week chasing overdue invoices.
Companies in the agriculture sector alone spend more than 16,000 hours a week following up on late payers simply to maintain their cash flow.
According to the study, every business in the manufacturing sector spends an average of four-and-a-half-hours chasing unpaid invoices each week. This compares to just 20 minutes in the property sector and a national average of nearly three (2.93) hours.
The Department of Trade and Industry estimates there are nearly four million SMEs in the UK, which equates to 11.5 million hours spent chasing unpaid invoices every week nationwide.
According to GMAC CF, the UK’s late payment culture appears to be entrenched. The Factors and Discounters Association (FDA) estimates that the average number of debtor days reached 60 in 2004, up from 57 the previous year, reinforcing the research's findings.
Nick Grainger, area manager for GMAC CF invoice finance said: “These shocking statistics underline the difficulties that SMEs in the manufacturing sector face on a daily basis. Many small businesses operate on tight margins and are under constant pressure to maintain cash flow, yet their ability to do so is severely hampered by habitual late payment.
“As a result, small business owners are being forced to devote a huge amount of their time to recovering debts, which ultimately limits their growth and expansion capabilities, and even their chances of survival.”
