Small business growth hindered by late payments

Concerns have been raised that late payments are having a negative impact on growth for many small businesses, after research found that almost two thirds (62 per cent) of invoices issued by UK small and medium-sized enterprises (SMEs) in 2017 were paid late.

The figure, which is up from 60 per cent recorded in 2016, also suggests that the UK’s so-called ‘late payments crisis’ is getting worse as the years progress.

According to the data, which comes from fintech firm MarketInvoice, three in ten invoices issued in 2017 were not paid until more than two weeks after agreed payment terms, while many more were not paid until six months had passed.

The report found that businesses all across the country were affected by the problem.

In some regions, such as Yorkshire and Northern Ireland, as many as 93 per cent of invoices were paid late last year – with the average value of each unpaid invoice sitting at more than £50,000.

Bilal Mahmood, of MarketInvoice, said: “A bad situation is getting worse. The problem is being compounded by 90-day payment terms demanded by larger organisations, which are becoming more common.

He added: “SMEs need to understand what measures they can take to reduce the risk, such as making terms and condition’s clear from the outset, chasing payments down and enforcing the right to claim compensation from late payments.”