Could late payments be affecting the UK's SMEs?

A survey of 80,000 invoices from UK businesses, conducted by MarketInvoice, has revealed that 62 per cent were paid late in 2017, amounting to £21.1bn outstanding late payments.

On average, the research supposedly showed that invoices were paid 18 days later than on time. This is said to seriously undermine UK SMEs and their growth and value they bring to the economy.

The average value of these invoices was £51,826 and three in 10 invoices paid late took longer than two weeks from the agreed date to settle, with some taking almost six months to be paid.

Bilal Mahmood, MarketInvoice’s spokesperson, commented: “A bad situation is getting worse. The problem is being compounded by 90-day payment terms demanded by larger organisations, which are becoming more common.

“SMEs need to understand what measures they can take to reduce the risk, such as making T&Cs clear from the outset, chasing payments down and enforcing the right to claim compensation from late payments.”

The research analysed which sectors, UK regions and countries were the worst late payers to UK SMEs. They were assessed on proportion of invoices paid late and how late. On average, these invoices were settled.

Sectors that are said to pay late included the food and beverage industry (83 percent), energy businesses (80 per cent) and wholesalers (79 per cent).

Meanwhile, those who took the longest to pay included transport businesses (25 days), utilities (23 days) and those in the media sector (21 days).

Businesses in Northern Ireland were found to be the worst late payers, in terms of region, with 93 per cent of invoices paid late. East Anglia (68 per cent) and East Midlands (66 per cent) came in second and third respectively.

Mahmood continued: “SMEs owners respect long payment terms, but late payments are inexcusable. For every day an invoice is late, it’s more time spent chasing payment. This means less time for [businesses] to focus on growing, hiring and creating innovative ideas.

“We want the UK to be the best place in the world to start and grow a business, but the UK’s small-to-medium-sized businesses are hampered by overdue payments. Things need to change quickly.”

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