After analysing data from 50,000 microbusinesses and hundreds of thousands of invoices, cloud accounting software vendor FreeAgent has revealed that only 52% of invoices sent in 2017 were paid within three days of their payment deadlines.
- 26% of UK micro-businesses have had to wait between three to six months to get paid
- 10% have had a client who has never paid them at all
- 70% of microbusinesses say they would like to see the government introduce legislation that enables them to secure compensation from late-paying clients
- 59% felt that the government should implement an official code of conduct for companies to adhere to with regard to paying clients.
Ed Molyneux, CEO and co-founder of FreeAgent, says: “Around half of the invoices sent by micro-businesses in the UK get paid late, and there are certain areas where the issue is considerably worse. Even in Manchester, where late payment is least prevalent, there are still many businesses who aren’t being paid on time. Some of these late payments go way beyond a week or two, with some taking months to settle, or not even paying at all. Micro-business owners don’t have the luxury of being able to absorb late payments into their accounts – they need to get paid promptly to keep their cash flow healthy.”
List of shame – who are the worst payers?
According to FreeAgent’s research, Peterborough has the worst record for late payment, with 68% of invoices being paid late. In contrast, Manchester can pat itself on the back as only 14% of invoices are paid late in the city.
Percentage of invoices paid late
- Peterborough – 68%
- Sheffield – 65%
- Stoke on Trent – 62%
- Chester – 61%
- Northampton – 60%
- Bromley – 35%
- Nottingham – 34%
- York – 28%
- Leeds – 19%
- Manchester – 14%
What this means for B2B service providers
Understanding the stresses that your customers are under is key to helping you work successfully with them. Reselling accountancy capabilities might be one way you can support them. Another is to ensure that you are not on the list of shame and are paying invoices in a timely fashion. Special terms and conditions for smaller businesses might be one way your company shows support to this sector. Late payment is becoming a political issue and is on the agenda for the Small Business Commissioner. Don’t get smeared in the publicity fall-out as this issue garners more coverage.