Late payments have almost doubled in the 12 months to December 2019, a new report has revealed.
The research, published by business finance specialists Market Finance, shows that little has been done to address poor payment practices by big business.
The report looks at late payment trends between 2013 and 2019, analysing a data set of more than 100,000 invoices.
According to the findings, late payment times have doubled in just 12 months, from 12 days in 2018 to 23 days in 2019.
The times do not include the contractual payment terms, only the days payment is delayed. For example, if a 30-day payment term is agreed, but the invoice is paid after 40 days, the late payment time is 10 days.
While late payment times have worsened, the proportion of invoices paid late has marginally improved, from 43 per cent in 2018 to 39 per cent in 2019.
Nevertheless, the average business is owed some £34,286 in late invoices, meaning £34 billion of cash flow is delayed across the country. As a result, 87 per cent of businesses are “prevented from taking on more orders”.
Commenting on the study, Bilal Mahmood, External Relations Director at Market Finance, said: “It’s great to see that fewer invoices were paid late in 2019 but worryingly, those that were paid late took twice as long as in 2018, up from 12 days to 23 days. Late payment practices harm business cash flow, hampers investment and, in extreme cases, can risk business solvency.
“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.”
For help and advice on any of the issues discussed in this blog, please get in touch with our expert team.