23% Increase in Unpaid Business Invoices

small business late payment spiralling in northern ireland

The number of unpaid UK business invoices has increased by 23% according to new tracker by AI platform provider, Sidetrade.

Sidetrade’s tracker is based on a statistical analysis of 26 million invoices, representing €54bn of business to business transactions with the payment behaviour of over 3.7 million businesses is tracked week by week. The company says that unsurprisingly, unpaid invoices have increased since lockdown measures went into effect.

In the report data, scientists considered only payment delays that were greater than this mean, i.e. payments more than 10 days overdue. They then retroactively calculated the ratio of late invoices to all outstanding invoices, week by week, since 1st January 2020, and determined the average unpaid invoices from the start of the year to 11th March 2020, when the Covid-19 epidemic was officially declared by the WHO. Deviation from this arithmetic mean up to 11th March is highlighted by the Sidetrade tracker.

From 1st  January through 11th March 2020, the tracker shows relative stability in late payment− around 20% for all of the countries analysed. Slight deviations in the pre-pandemic period are largely due to the timing of company invoicing and order-to-cash processes (e.g. start of month, end of month, decade).

Needless to say, since 11th March 2020, payment delays have been skyrocketing. Rate of increase in unpaid invoices have shot up 23% in UK, 26% in the Netherlands, 44% in Belgium, 52% in Spain, 56% in France and 80% in Italy. The economic fallout for businesses correlates closely with the development of the pandemic.

Inter-company credit is a major factor in the economy. Across Europe, businesses are facing insolvency due to declines in revenue and delayed payment. One UK report argues a fifth of SMEs in the UK will collapse due to a lack of cash because of Covid-19. Separate research by the Federation of Small Business (FSB) says 50,000 businesses a year go under because of delayed payments.

Delays in B2B payment have been an ongoing issue across sectors. Due to Covid 19, the problem has been exasperated. Research from Bacs, and commissioned by Pay.UK in 2019 found that the UK SME late payment debt has risen to a staggering £23.4 billion, up £10.4 billion on the £13 billion owed in 2018. On top of that, the research showed that UK SMEs are now facing a total bill of £4.4 billion a year, just to collect money they are owed. The average late payment debt burden has also increased to £25,000 per company, up from just over £17,000 in 2018. The statistics were largely based on B2B payments.

The UK Government’s Department for Business (BEIS) introduced new measures to tackle late payment in June 2019, including new powers for the Small Business Commissioner, and a dedicated fund to help SMEs purchase technology to help with payments. The Government’s Cabinet Office has also written to public sector bodies recently, telling them to pay suppliers despite the Coronavirus pandemic.


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