New figures released from MarketInvoice show that 62 per cent of small and medium sized enterprise (SME) invoices were paid late in 2017. This evidence comes despite Government measures introduced earlier this year to try to change the UK’s late payment culture.
The scheme announced in January, by the Department for Business, Energy & Industrial Strategy (BEIS), mandated that all large corporations must publish their payment practices and performance data. It hopes that this increased transparency and disclosure might improve the way big corporations treat small businesses and reduce the incidence of them being used as a credit line by delaying payments.
The Federation of Small Businesses estimates that if payments were made promptly in the UK, 50,000 business deaths could be avoided every year, which would add £2.5 billion to the wider economy.
According to the latest figures, the amount outstanding in late payments in 2017 equates to over £21 billion and this culture of late payment practices hampers a business’s ability to invest in growth.
The average value of late invoices was £51,826 and three in 10 invoices paid late took longer than two weeks from the agreed date to settle, while some were almost six months overdue before being paid.
The sectors that most frequently pay their invoices late were found to be the food and beverage industry, energy businesses and wholesalers, while transport businesses, utilities and the media sector took the longest to pay.
“A bad situation is getting worse,” said Bilal Mahmood, MarketInvoice spokesperson. “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 terms and conditions clear from the outset, chasing payments down and enforcing the right to claim compensation from late payments.”