Research from Lovetts reveals that late payers are being allowed 20 more days to pay their invoices than they were in Q1 2014, marking a 24% increase year on year.
It is no secret that the late payments culture has a crucial impact on commerce around the globe – it’s estimated that there is currently as much as $2 trillion (£1.27 trillion) locked up in late payments globally, which affects supply chains significantly.
The figures from Lovetts indicate that in Q1 2014, suppliers waited an average of 83 days from the point of issuing an invoice before threatening legal action with a Letter Before Action (LBA). In the same quarter this year, suppliers are now waiting 103 days before taking the same action.
CEO of Lovetts, Charles Wilson, says: “From our figures, the scale of the late payment scandal in the UK is getting worse, not better, despite the high profile campaigns to stamp out the problem.
As the business climate improves, it seems that British businesses are reluctant to rock delicate client relationships by threatening legal action but their invoices will simply end up at the bottom of the pile.
It’s vital that businesses act early on overdue invoices rather than delay. They also need to claim their right to compensation – not just for current customers but past customers who paid late too.”
The Late Payments Act allows businesses that are paid late to claim compensation, plus interest for the period the debt was overdue.
Wilson goes on to say that: “A growing number of businesses are now utilising the act to take on late payers, past and present and recovering significant sums to compensate them for the administrative and legal costs they have incurred chasing late payment.
We want more companies to take action in this way – it will send a very clear message to late payers that delaying payment to their suppliers can seriously damage their bottom line.”
In addition to this, alternative FinTech financing bodies are increasingly emerging as business networks, offering dynamic discounting and supply chain financing solutions as part of software packages that are designed to increase liquidity and improve cash flow throughout the supply chain.
As the late payments culture continues to worsen, it is thought that more and more businesses will enter into these alternative financing business networks in attempts to unlock the trapped capital that is increasingly stunting business growth.