Nearly a million SMEs are waiting at least three months for payment

Three in five SMEs (61%) have had clients or customers not pay invoices by their due date over the past year, according to new research from automated credit control firm Satago. With one in five (19%), or 928,000 SMEs having payments outstanding for more than three months and one in six (15%) having invoices that were not paid at all.

Despite SMEs being owed billions through late payments and with two fifths (40%) writing off bad debt every year, SMEs are not exhibiting effective procedures for escalating the chasing of debt.

Satago’s findings also reveal three quarters of firms (77%) do not have a person or a procedure in place for chasing bad debt and more than half (52%) do not have an established escalation process for late payments. What’s more only three in 10 SMEs (30%) are taking advantage of late payment regulations to charge indebted customers.

Indeed the research highlights how the lack of process causes SMEs to implement a wide array of processes to chase debt – from telephone calls, emails and the threat of legal action to cutting the supply of goods/services and showing up at customer’s property in person. 

Steven Renwick, Founder and CEO at Satago said: “SMEs that offer customers trade credit must ensure they are effective and professional when collecting debt. Businesses must invoice on time with accurate details and, though it can be daunting, businesses need to proactively chase for payment.

“Remember to always remain friendly and courteous as these regular conversations with customers may lead to a better relationship, improve credibility and increase the likeliness of being paid on time in the future.”

Satago has launched a payments service that allows SMEs to step away from the ongoing labours of dealing with late payers. It offers an automated credit control service that tracks late payments and sends  automated email and letter reminders to offending customers, allowing users to either use it as “set and forget” automated accounts receivable, or to make their own credit control process more efficient.