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Distribution SMEs 'doing it for themselves'

22 September 2010

New research from Bacs, the organisation behind Bacs Direct Credit, has revealed more than half Britain’s distribution sector SMEs (57%) don't anticipate assistance from government in tackling the late payments issue

They also say the number of companies feeling the impact of late payments in June 2010 has fallen by a massive 26% in just six months.

Mike Hutchinson, head of marketing at Bacs, believes this is largely owing to the individual companies’ efforts and says: “It’s extremely heartening to see many distribution companies making great strides to help themselves beat the late payments cycle, by sharpening up their billing and credit control procedures.”

However, there are still 150,000 distribution companies affected by late payments and Bacs’ research shows that the average amount of money owed to these companies is a massive 178% higher than it was six months ago (£14,000 in December 2009 compared with £39,000 in June 2010), with £5.8 billion in total now owed to distribution businesses across Britain (up from £2.9 billion in December 2009).

Hutchinson continues: “There is valuable help and advice available, through schemes like the Prompt Payment Code, for companies still suffering from late payments and SMEs will be well served to draw on all available resources to find new routes forward.”

For example, with many SMEs still highly dependent on cheques, a specific piece of advice from Hutchinson is for companies to consider adopting automated payments methods. Bacs’ research shows that 79% of SMEs still use cheques to pay bills and, with cheque clearing facilities due to be phased out by 2018, Hutchinson says:

“SMEs should consider replacing the use of cheques with automated payment methods sooner rather than later. Automated payments offer many benefits in streamlining processes and helping cash flow, which companies can take advantage of now to help combat late payments.”

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