OVER half of the invoices issued by the UK’s small businesses were paid late last year, according to new research.
Accounting software provider Xero, who compiled the data, found that these delays caused 53.6 per cent of small businesses to start 2018 in negative cashflow.
The research is drawn from hundreds of thousands of small businesses that process their invoices through Xero.
The firm has also launched a Small Business Insights index to provide a picture of the UK’s small business economic health.
“Small businesses are the backbone of the British economy however there is little by way of accurate and timely statistical insight into their health and productivity,” said Xero UK’s managing director and co-founder Gary Turner.
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“Sharing this data and considering it in the context of the challenges small businesses face will help the small business community gain a deeper understanding of the collective experience.”
Xero, which announced a partnership with MarketInvoice last year, found that over the last year, 30-day invoices are on average paid after 40 days.
Its research also showed that FTSE 350 companies in the pharmaceuticals and biotechnology sector paid slowest, with invoices being paid after an average of 47 days in 2017, while real estate investment trusts averaged the fastest settlements at 38 days.
“Small businesses are crucial to the health of our economy so it is vital that they feel supported in all areas, but particularly in the fight against late payments,” said Paul Uppal, the UK’s small business commissioner.
“My role as commissioner exists to help small businesses get paid on time, and while the government works on measures to address the late payment epidemic, businesses should not be afraid to come to us for help.
“Now is the time to make Britain the best place for entrepreneurs to flourish.”