The culture of late payment to UK SMEs is a regular topic in our weekly Business Finance Bulletin and the reason for this is that delayed payment hurts many businesses by undermining their growth and the value they bring to the UK economy.
A new survey from business finance company MarketInvoice reveals that 62% of invoices issued by UK SMEs in 2017 (worth over £21b) were paid late, up from 60% in 2016.
The survey found that the average value of these invoices was £51,826. A third of invoices paid late took longer than two weeks from the agreed date to settle – some of which took almost 6 months to be paid.
Sectors that frequently 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 (25 days), utilities
(23 days) and those in media sector (21 days).
In terms of regional experiences, businesses in Northern Ireland were found to be the worst late payers with 93% of invoices paid late. East Anglia (68%) and East Midlands (66%) came in second and third respectively. Scotland was the best of the worst, where half (53%) of invoices were settled late.
The Marketinvoice research also examined invoices sent to 93 countries. German companies were the worst late payers, taking an extra 28 days to settle invoices from agreed terms. French firms took a further 26 days and businesses in the USA 20 days.
While UK companies (66%) often pay invoices late, those in the USA (71%) and continental Europe (73%) are even more likely to delay payment. However, the UK still takes twice as long (18 days) to pay UK suppliers than counterparts in Europe (9 days).
To lessen the impact of late payment Marketinvoice suggests,
– making T&C’s clear from the outset
– chasing payments
– and enforcing the right to claim compensation from late payments
The Duty to Report measures, which requires large businesses to report on invoice payments twice yearly, that came in to force earlier this year will help but how effective it will be remains to be seen.
Hi Rob, it was so interesting and entertaining listening to you at the Kevin Green Wealth Coach Workshop in Reading this weekend! I didnt realise you can find Finance proposals such fun!. Brilliant tips! Thanks.
Rob delivered a series of 3 workshops aimed at understanding how finance houses look at finance propositions with the aim for us as a team to deliver more of a bespoke offering to our customer base. The training was delivered to a mixture of staff who work with new businesses start-ups and existing established businesses across Mid & South West Wales. Rob delivered the training with an abundance of passion and has really helped my team look at financial propositions in a different light, many thanks again Rob and I look forward to work with you in the near future.
Further to your recent presentation at LEAD Wales just wanted to say it was very refreshing to see somebody talk passionately and positively about finance, very insightful!
I wanted to thank you for such an insightful, energetic, and entertaining talk at the Kevin Green Wealth event on securing funding and creating a successful plan. It was brilliantly executed and a pleasure to listen to and the ideas I’ve learned are definitely going to help me in going forward.
Rob kindly agreed to attend the recent Pontypridd RFC sponsors networking evening and delivered what can only be described as an excellent talk on 5 Tactics to Boost Your Business and Your Profits. He kept the audience engaged throughout and the feedback from everyone was excellent. Rob is very knowledgeable on business and finance and on top of that is a genuine nice guy. We hope to have him back at a future event and I have no hesitation in recommending Rob’s services.