One in four (26%) SMEs are owed between £5,000 and £20,000 in late payments


This article is brought to you by Retail Technology Review: One in four (26%) SMEs are owed between £5,000 and £20,000 in late payments.

Three fifths (60%) of small businesses say that late payments have increased in the last six months, according to research1 by Payit, NatWest’s open banking payments solution.

The research, revealing the challenges facing SMEs with invoicing, is announced as Payit by NatWest launches a new service called PayMe, to all NatWest and RBS business banking customers. This service, using Payit technology, aims to help small businesses receive faster payments of invoices, at a lower cost than other payment methods.

Around two out of five (37%) small businesses reveal that payment requests and invoices are late. The launch of this new feature for business customers aims to alleviate the time SMEs spend issuing and chasing payments. In fact, the average SME spends four hours a month following up with customers for payment on outstanding invoices. For time-strapped business owners, energy could be better spent growing their business. 

Businesses will be able to use the PayMe feature within the NatWest Business Banking App. Requesting money from any of their clients, customers or associates is simple; with businesses generating a link or QR code for payers who have any UK bank account to scan, from one pence up to £50,000. This can be shared with the customer through Facebook, WhatsApp or email and it can be embedded in an invoice. 

Late payments can have a detrimental effect on a small business, with almost half (44%) of SMEs saying that late payments cause cashflow issues, one in four (26%) admit it impacts paying for materials and a quarter struggling to pay staff when payments are late. On average, businesses are faced with £5,500 in outstanding payments every month, and over a quarter (26%) are owed between £5,000 and £20,000.  

Mike Elliff, CEO, Payit by NatWest says: “Time is a valuable asset to many small businesses, particularly in the current climate. Being able to offer and accept this method of immediate payment will give many UK businesses back a lot of the time previously spent chasing payments through emails and phone calls. At the same time, it removes the anxiety felt by many business owners wondering “when will I be paid?”. This means that they can concentrate on doing what they love – growing and managing their business. By relieving a lot of the stress and strain on small business owners in terms of cashflow and paying staff, Payit technology continues to help put businesses in a position to thrive.”

PayMe uses Payit technology to solve an age-old business anxiety – getting paid immediately. It enables businesses to receive payments quickly from any of their customers or associates who have a UK bank account, preventing the impact of late payments on cashflow. It will also help businesses receive payment at a lower cost than some other payment methods.

The new feature is primarily aimed at businesses that take cash or request payments by bank transfer and issue bank details manually to their customers in person or face to face such as sole traders, charities, clubs and societies. It is likely to be widely adopted by tradespeople and those who provide in person services in domestic settings with a need to take payment, such as plumbers, electricians and mobile hairdressers.

The launch of the new PayMe feature is based on demand from businesses looking for new, innovative and cost-effective ways to streamline service, save time and reduce running costs. Payit’s research found that the biggest driver among SMEs to change payment methods is to spend less time chasing invoices, followed by speed of payment. In addition, 61% of SMEs say that they are likely to use QR code functionality to collect immediate payments via bank transfer.

Business banking app users will be able to use the PayMe feature within the business banking app without any additional sign up, login or registration requirements. All payments will be settled instantly in real time using Faster Payments to clear and settle the payment so a business will receive the funds within two hours if not immediately.

There is no need for card readers as requests are made directly from the app making it a fully mobile payment solution. Business banking customers will receive confirmations when payments have been made so they can keep track and are able to add references to payment requests and track historic payments.  

The new service will be available to NatWest and RBS business banking customers using the business banking app from 13 June for RBS customers and from 15 June for NatWest customers. 

1. Research conducted by Censuswide sampling 1,000 UK Business owners/decision makers or heads of finance in SMEs with a turnover of up to £2,000,000 between 26th May 2022 – 6th June 2022.

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