UK late payment culture ‘worst in world’
The UK's late payment culture is the worst in the world, according to research from technology giant Sage.
Only Singapore could match the UK proportion of late payments, as 18% of all invoices paid to small and mid-sized businesses are late in both nations.
Of those unpaid invoices, 9% turn into bad debt, thereby increasing the risk of insolvency for the businesses involved.
Alan Laing, Sage's UK and Ireland managing director, described the situation as 'totally unacceptable'.
Small businesses are spending an average of 15 working days annually chasing late payments, and firms in no other country lose as much time.
In fact, as many as one in two businesses reported that they expect to be hit by late payments over the festive season, if they have not been already.
When businesses are operating on tight margins and with low cash reserves, any delays to payments can cause severe cash flow issues, while also inhibiting growth.
Mr Laing added that firms must not be afraid to chase businesses for payment, as although it may impact upon client relationships, the business itself may fail without it.
'We need the UK's culture around late payments to change, so that small businesses can get on with doing what they love - running their business - rather than worrying about when the money will come in' he said.
Insolvency and restructuring body R3 reports that 20% of business failures relate directly to late payments or from the impact it has had elsewhere in the supply chain.
Small business commissioner Paul Uppal has said he wants to 'stamp out' poor payment practices so that innovation and growth in the UK are not impacted.
However, thousands of firms nationwide have shut as a result of late payments in 2017, and it is thought many more are on the brink.
For those facing the threat of administration, it's important to act quickly and assess the options that might be available.
A corporate recovery specialist can provide guidance and advice on everything from basic insolvency measures through to the various forms of restructuring that could be implemented.
By Phil Smith