MIDLANDS-based small and medium-sized enterprises (SMEs) continue to be the worst hit by late payments according to new research from Bacs Payment Schemes Limited (Bacs), the company behind Direct Debit and Bacs Direct Credit.

New statistics indicate that for the third year in succession, the value of late payments owed to SMEs in the UK has increased, now reaching a staggering £30.4 billion.

When questioned, 66% of Midlands-based SMEs said they have experienced late payments at one time or another, being owed on average £41,000 – more than £10,000 over the national average.

This contributes to the 308,000 SMEs in the region affected by late payments, being owed some £12.6 billion (up by almost a third on 2008).

Cashflow remains the most common reason for late payments as the financial downturn continues to impact on Great Britain’s economy, with 17% of Midlands SMEs citing it as a leading reason for late payments.

Unlike only 1% of their counterparts in the North and 2% in the South, however, 17% of SMEs in the Midlands also cited that they continue to be told “the cheque is in the post”.

The problem looks set to only get worse, with the research also showing that almost half of Midlands-based SMEs agreed that if they are paid late they will pay their invoices later too. This is evidenced by just under a third of Midlands-based SMEs reporting they are paying other organisations later in 2009 than in 2008.

There is some positive news for the region though, as in stark contrast to the length of time companies in the North and South are forced to wait for payments beyond the agreed terms (now around 35 days), payment for SMEs in the Midlands come considerably quicker - in 24.5 days.

Other Bacs stats showed:

11% of Midlands SMEs ask for payment on receipt of invoice – down 20% from 2008

5% specify within 14 days – up from 3% in 2008

72% ask for payment 30 days/end of month following receipt of invoice – up from only 39% in 2008

3% specify within 60 days – down from 9% in 2008

Michael Chambers, managing director of Bacs, said: “The national figure for overall late payments owed to British SMEs has grown again and research shows that the Midlands is bearing the brunt of this growth.

“Although companies in the region have managed to halve the length of time they wait for payments, and reduce the amount owed on average in comparison with 2008, the number of businesses affected by late payments has more than doubled.”

He added: “With our research showing that cashflow is the main reason for late payments, it is vital that businesses receive funds owed to them in accordance with the payment terms they set out, in order to stem a potential domino effect.

“Insisting on payment straight into bank accounts by Bacs Direct Credit can help with that. We strongly encourage any SME experiencing late payment difficulties to visit www.paymedirect.co.uk for guidance and advice on avoiding payment problems.”

For more information about late payments and how to tackle them head on, go to www.paymedirect.co.uk, where Bacs has developed a series of hints and tips for encouraging prompt payment.

You can also download a map of Great Britain that Bacs has prepared, showing regional and sector differences when it comes to late payment problems.