The report suggests that sixty per cent of UK SMEs are now experiencing late payments, with the average SME waiting for £38,186 in overdue payments. One in four SMEs admit that if the amount they are owed grew to £50,000 it would be enough to send them into insolvency.
Director of Debtcol, Paul Davies commented:
"The Prompt Payment Code was established in 2008 to improve SMEs’ financial stability by helping them to recover the tens of billions of pounds of late payments owed to them more quickly. The problem is that it is a voluntary code and there are no fines or other sanctions for signatories that breach the code.
Despite endless government promises to crack down on late payments the current code is inadequate and looks as if many small businesses will spend a good part of 2014 chasing larger businesses for money they are owed.
Until there is a major shift in business culture, it is likely little can be done with the existing Government legislation and late payment will continue."