Almost half of UK businesses had invoices paid late by customers in the last six months, new research has revealed.
In a survey of 500 UK businesses, 49 per cent said they had experienced late payments. Businesses of all sizes – from sole traders to companies employing more than 250 people – were affected, with an average of 15 per cent of all their invoices paid late.
Sole traders affected were hardest hit, with an average of 17.3 per cent of their invoices being paid late in the last six months. In contrast, late payment victims employing more than 250 people had an average of 12.3 per cent of invoices paid late.
The research, published on 18 May, was carried out for R3, which represents business recovery professionals. Andrew Tate, R3 vice-president, said: “Late payment puts unnecessary strain on a business’ cash flow, increasing the risk of insolvency. Despite government guidelines and business campaigns, late payment still remains all too common. Businesses know how much it costs others to chase down debts, and feel they can still get away with it.”
John Allan, National Chairman of the Federation of Small Businesses (FSB), says: “The weight of evidence showing the damage poor payment practices are having on the UK economy grows greater each day with the amount owed in late payments now at £41.5 billion. Once again we find it is sole traders and smaller firms which are facing the brunt of late payments, and this is putting viable businesses at risk of closure.”
“Addressing the UK’s poor payment culture – particularly among large companies towards their smaller suppliers – must be a top priority for the new government. Small businesses see progress on payment practices as a key benchmark of success for the new administration.”
At Palmers, our Insolvency services include assisting clients in issuing statutory demands, which can be used to claim payment of a debt from an individual or company.
We can also advise on issues such as updating terms and conditions of business to include charging interest on debts or amending them to take advantage of the Late Payment of Commercial Debts Act 1998, which enables interest to be claimed on debts owed by other businesses and public sector organisations, for up to six years after a late payment has been received.
For more information, please visit our website or contact Andrew Skinner.