Also, three quarters of SMEs are waiting a month or longer beyond agreed terms, according to research by Pay.UK, which runs the Bacs direct credit and direct debit payment services

Its figures, based on a poll of 355 companies, show UK SME late payment debt has risen to £23.4bn, up £10.4bn on the £13bn owed in 2018. The number of SMEs experiencing overdue payments has hit 54%, marking the highest level since 2015, when the figure stood at 55%.

Some three quarters (78%) of SMEs say they are being forced to wait a month, or longer, beyond agreed payment terms before being paid, while 45% are being kept waiting two months or more.  The research also shows that UK SMEs are now facing a total bill of £4.4bn a year, just to collect money they are owed, with around a quarter (22%) of those waiting on funds spending more than £500 a month chasing payments.

The average late payment debt burden has increased to £25,000 per company, up from just over £17,000 in 2018, with SMEs reporting that, on average, a debt burden of £35,000 could jeopardise their business.

Of those SMEs impacted by delayed payments, 63% say they have a negative effect on their businesses. A third (35%) are forced to rely on bank overdrafts, while almost a quarter (24%) say that being paid late forces them to hold off paying their own suppliers.

Paul Horlock, Pay.UK CEO, said: ‘It is concerning that so many smaller businesses are struggling because of late payments in 2019, especially as there are so many ways they can now get paid.  Offering customers a choice of payment or automated options can help remove barriers to make sure a bill is settled on time.’

The research also revealed that 13% of SMEs experiencing late payments struggle to pay their business bills, 12% have difficulties paying their own staff on time, and 10% rely on invoice financing to draw cash into their businesses.