The number of days an invoice was paid late almost doubled from 12 days in 2018 to 23 days in 2019, analysis has found.
UK lender MarketFinance analysed 100,000 invoices between 2013 and 2019. While most businesses had 45-day payment terms, 39% of invoices issued in 2019 were paid late. This was an improvement on 2018 when 43% of invoices were paid late.
Invoices that were paid late in 2019 were on average valued at £34,286, compared to those paid on time which averaged £24,624.
Professional and legal services firms suffered the most with late payment with 70% of invoices being paid late. Manufacturers (57%) and retailers (49%) were also heavily impacted.
However, late payment practices improved for companies working in the utilities and energy sector, with only a third (34%) of invoices being paid late in 2019, compared to two-thirds (66%) in 2018.
Regionally, the Southeast of England and Northern Ireland had the highest number of invoices paid late in 2019, at 56% and 55% respectively. Meanwhile, US companies were the worst late payers, taking an extra 51 days to settle invoices from agreed terms in 2019, followed by German firms at 32 days.
Bilal Mahmood, external relations director at MarketFinance, said: “SME owners have come to expect long payment terms but late payments are inexcusable. For every day an invoice is late, it’s more time spent chasing payment. This means less time for business owners to focus on growing their business, coming up with innovative ideas and hiring more people, or just paying their staff and bills. Things need to change quickly.
“Government measures such as the Prompt Payment Code and Duty To Report have helped create awareness but need more bite. 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. Such unfair payment practices impact a business’ ability to invest in growth and have no place in an economy that works for everyone.”
A CIPS survey found two-thirds of UK supply managers believed company boards should be held legally responsible for payment terms.
Malcolm Harrison, CIPS group CEO, said: “While there are pockets of good practice where payment is prompt, the UK’s rotten culture of late payments is eating away at the core of Britain’s economy.”
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