Payment times: How long is too long?

Back in 2018, when the government turned its attention to payment times 24 per cent of businesses in the UK reported that late payments threatened their survival – and SMEs were disproportionately affected. At that time, 55 per cent of SMEs that offered trade credit were vexed by late payment. 

Since then, the Prompt Payment Code has been strengthened, mandating that 95% of small business invoices should be paid within 30 days. However, the PPC is still voluntary and, with only 384 current signatories, its impact is limited. 

Payment times are critical now. Business insolvencies were higher in January 2024 than in January 2019 (or any subsequent January) and were up 5% year-on-year. Voluntary liquidations were slightly lower than in January 2023; an uptick in compulsory liquidations has driven the overall increase. 

Financial Accountant is tracking trends in payment times – take our nine-question poll to share your insights and experiences, and we will share results in the coming weeks.