Company filings reveal late payments still a major issue

The vast majority of businesses take longer than 30 days to pay their suppliers, according to an analysis of company filings.

This piles on the pressure for smaller firms as they either face cash flow difficulties or are left without finance, meaning a knock-on effect is felt along the supply chain.

Around 200 filings were studied by accountancy firm UHY Hacker Young, with just 29% of businesses settling their accounts in 30 days or less on average.

Meanwhile, just over half of all invoices are paid in that time, while the longest average payment time exceeded 110 days.

The analysis focuses on businesses that need to report the length of time it takes them to pay suppliers under the new government regulations.

Those firms meeting two of the following criteria - a balance sheet of £18 million, turnover of £36 million or more annually, or 250 or more staff - must now file reports biannually.

According to the findings, the new regulations have so far failed to have a major impact on the culture of late payments that exists in the UK.

While some businesses are seeking alternative finance options to help growth or to cover any shortfall, others could be forced into administration if they are unable to rectify their cash flow troubles.

Payment times varied across different sectors, while branches of firms in different locations also paid at irregular speeds.

At the time of the study, none of the major supermarket chains had reported their figures, with companies having until January or April to detail their payment terms.

Government figures suggest as much as £14 billion can be owed to businesses at any point in time while the Federation of Small Businesses has urged for more action to be taken.

FSB Chairman Mike Cherry pointed to the organisation's own research which shows that a third of small firms are paid late.

He said that while the new regulations represent 'a good step', more alterations to the protocols are needed in order to 'name and shame' prolific late payment offenders.

Small business commissioner Paul Uppal has suggested that tackling the late payment culture in the UK could provide a £2.5 billion boost to the economy annually while also reducing the threat of insolvency for some of the nation's smaller firms.

 

By Phil Smith

 

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