The team at Commercial Domestic Investigations always have their finger on the pulse of UK SME news, and especially anything that affects cash flow.
In an article from Forbes this week, it was revealed that Satago, a specialist in cash flow management, have claimed that Britain’s small businesses are missing out on a monthly windfall worth £900m.
This is due to very few small to medium sized businesses taking advantage of their legal right to charge interest and penalties when their bills are paid late.
As we have previously discussed, UK SMEs are plagued by late payment, with the amount believed to be owed to SME’s now standing at approximately £67.4 billion. The annual report published by BACS, says overdue bills now total £31.3bn, which is more than ever before. Satago’s own data suggests that at any one time 45 per cent of the typical SME’s invoices are overdue.
So far there hasn’t been much success from Government initiatives to protect SME’s from late payments. However, there are now plans to strengthen the Prompt Payment Code, which was introduces to help smaller businesses hold larger companies to account.
More often than not SMEs reputation concerns stop them from acting on late payment, and fear of jeopardising relationships with large customers. Steven Renwick, founder of Satago, agrees that this is also what has prevented SMEs from claiming financial redress:
“Although not universally known or understood, companies suffering late payment after the invoice’s due date have the legal right to charge the late paying company both a fee, dependent on the size of the invoice, and interest of 8 per cent over the current base rate,” Renwick explains. “For example, an SME sending invoices for less than £1,000 is legally entitled to charge a late payment fee of £40, even if the payment is just one day late.”
Renwick also makes the point that such fees and interest remain chargeable for six years after the invoice is paid late. So realistically, an SME can go back over its records and demand that all late payment and interest fees be paid.
According to Satago’s research, compensation of this kind is worth £900m a month, based on its analysis of how many SMEs are owed money. In a study of its own customers, Satago also found that the typical SME could have claimed £32,000 in penalties and interest charges over the past 12 months.
Satago also believe that further changes in the law are necessary to help SMEs. In particular it wants to see companies forced to publish details on their late payment liabilities.
“The Government could force all companies to disclose their total late payment liabilities on to the Prompt Payment Code website,” said Renwick. “Better still would be legislation to force late payment liabilities to be added to all companies’ year-end financial statements, helping shareholder pressure to be brought to bear.”
If you think your business could benefit from our services please contact Commercial Domestic Investigations for an impartial and friendly chat about your needs.
About Commercial Domestic Investigations
Commercial Domestic Investigations are regarded within the debt collection and credit control industry as one of the best credit management companies in the UK. Established in 1988 to support and service all sizes of companies in the field of Credit Management.
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We now boast a national client base in excess of 30,000 companies. Commercial Domestic Investigations has grown by listening to clients’ requirements and adapting our services to meet all companies’ needs from Sole Traders, SMES, Ltd and Plus. Please contact us on 08444 159200 for more information.