A WHOPPING 62 per cent of invoices issued by small- and medium-sized enterprises (SMEs) in the UK last year were paid late, MarketInvoice research can reveal.
This equates to £21.1bn outstanding in late payments in 2017, according to the peer-to-peer invoice finance company’s data, released on Thursday.
The average value of these invoices was £51,826 and three in 10 invoices paid late took longer than two weeks from the agreed date to settle, while some were almost six months overdue before being paid.
The research conducted in November and December 2017 analysed 80,904 invoices raised by UK SMEs to a range of businesses across the UK and to 93 countries.
The sectors that most frequently pay their invoices late were found to be the food and beverage industry, energy businesses and wholesalers, while transport businesses, utilities and the media sector took the longest to pay.
Businesses in Northern Ireland paid 93 per cent of their invoices late, followed by East Anglia (68 per cent) and East Midlands (66 per cent).
Outside of the UK, German firms were the worst late payers, taking an extra 28 days to settle their invoices from agreed terms. French firms took 26 days and US businesses took 20 days.
While UK companies (66 per cent) often pay invoices late, those in the US (71 per cent) and continental Europe (73 per cent) are even more likely to delay payment. However, the UK still takes twice as long (18 days) to pay UK suppliers than counterparts in Europe (nine days).
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“A bad situation is getting worse,” said Bilal Mahmood, MarketInvoice spokesperson.
“The problem is being compounded by 90-day payment terms demanded by larger organisations, which are becoming more common. SMEs need to understand what measures they can take to reduce the risk, such as making terms and conditions clear from the outset, chasing payments down and enforcing the right to claim compensation from late payments.”
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Mahmood welcomed the new ‘duty to report’ measures introduced by the government earlier this year, which mandate large businesses to reveal information about their invoice payments twice a year.
“We want the UK to be the best place in the world to start and grow a business, but the UK’s small-to-medium-sized businesses are hampered by overdue payments,” said Mahmood. “Such unfair payment practices impact a business’s ability to invest in growth and have no place in an economy that works for everyone.”