UK’s micro-businesses plagued by late payments
Nearly half of invoices from the UK’s micro-businesses were not paid on time in the last year, new research has shown.
It means that the smaller businesses and freelancers are facing difficulties according to FreeAgent, as there is greater pressure to manage cashflow effectively.
Some 49% of invoices sent by micro-businesses were not paid on time, despite efforts from the Government to improve how the UK’s payment set-up works.
Analysis on hundreds of thousands of invoices formed the basis of the research, which also revealed what locations around the UK are worst for late payments.
Sheffield topped the list, as just 24% of invoices were paid within three days of their payment deadline.
The situation was not much better in Twickenham and Slough, where only 27% and 29% of invoices were paid on time respectively.
That compares to Manchester, where 75% of invoices from 2015 – the period covered by the study – were paid on time.
Ed Molyneux, co-founder of FreeAgent, described late payments as a widespread issue for micro-businesses and pointed to certain “hotspots” where the issue is more prevalent.
While some of the invoices in the study were paid an extra week or two late, there were others who failed to pay at all.
A small business commissioner is to be tasked by the Government to tackle the problem, while a consultation is to determine exactly how they will act on complaints.
Late payments can cause cash flow problems for small and micro-businesses, especially those operating on tight margins who can ill-afford to absorb late or non-payments.
According to FreeAgent, a cultural shift is required to tackle the late payment issue to ensure that the UK’s network of smaller firms are not left facing unnecessary risks.
By Phil Smith