The problem of late payment to small companies is not going away, despite various efforts to tackle it. According to cloud software firm FreeAgent, the problem remains ‘chronic’, with only half of invoices paid on time. Indeed, FreeAgent reviewed data from a sample of its 50,000+ customer-base and analysed hundreds of thousands of invoices that were sent in the last year. The firm found that Sheffield is the area worst affected by late payment – with just 24% of invoices sent during the 2015 calendar year paid within three days of their payment deadline – closely followed by Twickenham (27%) and Slough (29%).
According to Ed Molyneux, CEO and co-founder of FreeAgent, “We know that late payment is a huge issue for the UK economy, but our research shows just how widespread it is for the freelance and micro-business sector.
“We need a complete cultural shift’
“We found that just half of the invoices sent by micro-businesses across the UK get paid late, while there are certain hotspots where the problem is even more prevalent. And this isn’t just clients taking an extra week or two to pay – it also includes the chronic late payers who sit on invoices for months, as well as those who just don’t pay at all.
“It’s certainly good news that the government recognises the late payment problem and is consulting over the appointment of a small business commissioner to tackle the issue. However, I fear that whoever is appointed will have limited power to actually punish companies who routinely pay late, aside from just naming and shaming them.
“Micro-business owners need to get paid promptly to keep their cash flow healthy and most don’t have the luxury of being able to absorb a late – or non – payment in their accounts. We need to see a complete cultural shift when it comes to paying invoices, so that these types of smaller businesses are not put at risk.”