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While fewer invoices were paid late in 2019 than last year, those that were paid late took twice as long, up from 12 days to 23 days.
Late payment practices harm business cash flow, hamper investment and, in extreme cases, can risk business solvency, Market Finance said following the release of its Business Insights report, which charts late payment trend between 2013 and 2019.
The analysis suggests that businesses typically agree 45-day payment terms from completion of work or delivery of goods. Despite this, almost two-fifths (39 per cent) of invoices issued in 2019 (worth over £34 billion) were paid late, an improvement on 2018 when 43 per cent of invoices were paid late.
However, the number of days an invoice was paid late in 2019 has doubled to 23 days from 12 days in 2018.
Market Finance also revealed that invoices paid late were typically larger in value (£34,286) than those paid on time (£24,624).
“Separate research we’ve conducted highlighted that 87 per cent of businesses are prevented from taking on more orders because of the cash flow constraint owing to late payments,” said Bilal Mahmood, external relations director at Market Finance.
“Government measures such as the Prompt Payment Code and Duty To Report have helped create awareness but need more bite.
“Until this happens, there are ways for SMEs to fight back against the negative impact of late payments, from having frank discussions with debtors that continuously fail to adhere to agreed payment terms, to imposing sanctions on those debtors, or seeking out invoice finance facilities to bridge the gap.”
According to the research, professional and legal services businesses suffered the most with late payment in 2019. Seven in 10 invoices were paid late, up from 30 per cent in 2018.
Manufacturers (57 per cent), retailers (49 per cent) and creative industries businesses were also heavily affected by late payment of invoices.
The analysis looked at invoices sent to 47 countries by UK businesses.
US companies were the worst late payers, taking an extra 51 days to settle invoices from agreed terms in 2019. German firms took a further 32 days and businesses in China took an additional 10 days.
Interestingly, French, Spanish and Italian businesses halved the number of days they paid late from 24 days late in 2018 to 12 days in 2019.