UK SME businesses survey found that over 80,000 Businesses are dealing with late payments.
The culture of late payment for SMEs is damaging their growth and the importance they bring to the UK economy. Studies conducted exposed that there was a 60% increase from 2016 to 2017 with 62% of invoices issued by UK SMEs were paid late.
With the cost of these invoices raising to £51,826 and three in ten invoices being paid longer that 2 weeks or even up to 6 months, the UK regions and countries were the worst late payers to UK SMEs.
Sectors were assessed on quantity of invoices paid late, how late, and if these invoices were in fact settled. Sectors that regularly pay late included the food & beverage industry 83%, energy businesses 80% and wholesalers 79%. Meanwhile, those who took the longest to pay included transport businesses taking up to 28 days, utilities at 23 days and those in media sector taking 21 days.
The worst late paying businesses are found in Northern Ireland with 93% of invoices being paid late, which took over Yorkshire in 2016. Coming in at second and third were East Anglia with 68% and East Midlands 66%, with Scotland having only 53% of invoices settled late.
During this research over 93 countries were studied, with German companies proving the worst late payers, taking an extra 28 days to settle invoices. French firms were not far behind with 26 days and the USA taking 20 days.
While 66% of UK companies frequently paying invoices late, 71% of the USA and 73% continental Europe are even more likely to delay payment. However, the UK is still taking up to 18 days to pay UK suppliers than Europe who are only taking an average of 9 days.
Bilal Mahmood, MarketInvoice spokesperson, comments, ‘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&C’s clear from the outset, chasing payments down and enforcing the right to claim compensation from late payments.
‘We look forward to how the Duty To Report 2 measures [which requires large businesses to report on invoice payments twice yearly] that came in to force earlier this year will play out. This is not about naming and shaming but encouraging positive behaviours at big business.
‘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 business owners to focus on growing their business, creating innovative ideas and hiring more people. Things need to change quickly.
Experts recommend that Business owners take a pragmatic approach to the issue of late or non payment.
Chris Spencer from leading UK Debt Collection Agency Federal Management said “Small Businesses can sometimes be reluctant to take action for fear of losing their customer
No Business has ever lost a customer simply because they were required to pay for goods or services”