By Lyndsey Hall
Almost two-fifths of invoices issued in 2019, with a total value over £34 billion, were paid late, according to analysis by MarketFinance Business Insights. Whilst this is fewer than the previous year, those that were paid late in 2019 took twice as long as in 2018.
According to the report, the number of days an invoice was paid late in 2019 has doubled to 23 days from just 12 days in 2018. Typically, invoices that were paid late were larger in value, with an average of £34,286, compared to those paid on time, which averaged £24,624.
The number of invoices with long payment terms (usually between 60 and 120 days) being paid late has almost doubled since 2013, rising from 13% to 23% in 2019. Over this six year period, analysts found that larger debtors insisted on longer payment terms (averaging 49 days) than smaller debtors (37 days). And when invoices were paid late, these larger debtors also paid much later (94 days) compares to smaller debtors (42 days).
Bilal Mahmoud, External Relations Director at MarketFinance, said “Separate research we’ve conducted highlighted that 87% of businesses were prevented from taking on more orders because of the cash flow constraint owing to late payments
“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.”
On a positive note, nearly nine in ten small business owners in the UK are confident they will achieve their main goal in 2020, according to research commissioned by Vistaprint. The study of 500 small business owners found their top 2020 objectives include substantially increasing revenue and growth and reaching new customers.
When asked how they’re currently feeling about 2020, UK business owners are most likely to say they feel confident, optimistic and prepared, although one in five feels apprehensive about what is to come, and a quarter admitted they see the upcoming year being a ‘struggle’. This is due to more than half predicting political changes will have an effect on their business in the wake of the General Election and the ongoing Brexit process.
Simon Braier, Customer Strategy and Insights Director at Vistaprint, said “While political changes and economic barriers are very real challenges facing Britain’s small business, our research show that these factors haven’t dampened the UK’s entrepreneurial spirit.”
The study ultimately found that nine in ten business owners are pleased they took the plunge and started their own business.
Was 2019 a successful year for your small business? Did you struggle with cash flow as a result of late payment at any point? How are feeling going into 2020 with a new Conservative government? We’d love to hear from you, leave a comment below or join the conversation on Linkedin or Twitter.