UK late payment situation worsening

The UK's late payment culture worsened in 2017, as more invoices were paid late than in the previous year, new research shows.

Business finance firm MarketInvoice found that 62% of all invoices issued by the UK's small businesses - worth more than £21 billion - were paid late last year, up from 60% the year before.

Not only do late payments undermine growth, but they also influence the economy and increase the risk of insolvency and financial insecurity for the firms involved.

Around 80,000 invoices were included in the research and the average value of those paid late was nearly £52,000.

Three in ten late invoices took longer than two weeks to be paid from the agreed payment date, while some surpassed six months before finally being settled.

The worst performing industry for late payments is the food and beverage sector, where 83% of invoices are regularly paid after their agreed terms.

Energy businesses and wholesalers are just behind, as 80% and 79% respectively of firms in those sectors regularly pay invoices late.

Meanwhile those in the transport, utilities and media sectors took the longest to pay, taking 25, 23 and 21 days respectively to settle invoices.

By region, Northern Irish firms were the most consistent late payers as 93% of all invoices were paid late, considerably ahead of East Anglia and the East Midlands were the figure dropped to 68% and 66%.

By country, German, French and US firms took 28, 26 and 20 days past their agreed terms to settle invoices.

Bilal Mahmood, of MarketInvoice, suggests 'a bad situation is getting worse' and pointed to the longer payment terms demanded by larger companies as a key issue.

He explained that small businesses need to cut their risk by having clear terms by not being afraid to chase for payments when necessary.

The firm also suggests that the new reporting measures - enforcing large companies to report their payment practices biannually -  is not about 'naming and shaming' but about encouraging better behaviour.

Chasing late payments costs valuable time for SMEs while those unable to manage their cash flow to cover such payments can face an increased risk of insolvency.

While a range of alternative finance options do exist to support firms in such circumstances in the short term, late payments still need to be addressed.


By Phil Smith


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