Dramatic rise in late payments to UK businesses
ALMOST three quarters (73 per cent) of invoices sent by UK businesses to EU firms were paid late in 2017, research shows.
The figure represents a huge increase from the 40.4 per cent of invoices that were paid late the year before.
Meanwhile, the proportion of overdue invoices from US businesses increased from 40.4 per cent to 71 per cent, according to a survey of 80,000 invoices by peer-to-peer business finance company MarketInvoice, released on Monday.
Businesses also took longer to settle invoices beyond the payment terms, the research said.
EU firms took 9.1 days to settle invoices (beyond payment terms) in 2017, representing a 30-fold increase from 0.3 days the year before. US firms took 19.5 days, compared with 7.1 days in 2016.
German firms were the worst culprits, taking an average 28 days to settle bills and paying 62.8 per cent of invoices late.
French firms took 26 days to pay bills, up from 6.1 days in 2016, while businesses in Ireland took 13 days after managing to pay bills 0.1 days early the year before.
The research reveals UK businesses operating at home were also hindered by late payments.
Businesses took an additional 18.4 days to pay their invoices in 2017, compared to 5.9 days in 2016. The proportion of invoices paid late increased from 62.3 per cent to 66 per cent.
Overall, 62 per cent of invoices issued by UK SMEs were paid late last year, up from 60 per cent in 2016.
The average value of these invoices was £51,826, equating to £21.1bn in outstanding late payments.
Bilal Mahmood, a spokesperson for MarketInvoice, warned that UK exporters are being squeezed globally as more of their invoices are being paid late and taking longer to be settled.
“The new trading environment in 2017, with Brexit negotiations on-going in the backdrop of global economic uncertainty, could have caused some consternation amongst late-paying firms around the world. This is not an excuse to not honour their payment terms,” Mahmood added.