Although fewer invoices were paid late in 2019, those that were paid late took twice as long as in 2018, the latest MarketFinance Business Insights.
According to the analysis, almost two-fifths of invoices issued in 2019 (worth over £34bn) were paid late. However, the number of days an invoice was paid late in 2019 has doubled to 23 days from 12 days in 2018. Invoices paid late were typically larger in value (£34,286) than those paid on time (£24,624).
The number of invoices with long payments terms (anywhere between 60 and 120 days) being paid late almost doubled between 2013 and 2019. This figure rose from 13% being paid late in 2013 to 23% in 2019.
Over the 6-year period, analysis found that larger debtors insisted on longer payment terms (49 days) than smaller debtors (37 days). In addition, when invoices were paid late, these larger debtors also settled much later (94 days) compared to smaller debtors (42 days).
“Separate research we’ve conducted highlighted that 87% of businesses are prevented from taking on more orders because of the cashflow constraint owing to late payments,” said Bilal Mahmood, External Relations Director at MarketFinance.
“Overall it seems who you are doing business with and where they are based is important to know for a small business if they need to forecast cashflow”.
“Government measures such as the Prompt Payment Code and Duty To Report have helped create awareness but need more bite.
“Until this happens, there are ways for SMEs to fight back against the negative impact of late payments, from having frank discussions with debtors that continuously fail to adhere to agreed payment terms, to imposing sanctions on those debtors, or seeking out invoice finance facilities to bridge the gap.”