Late payment delays double in a year

UK businesses are waiting longer to get paid in 2019, with late payments doubling from 12 days in 2018 to 23 days currently, according to research from MarketFinance

The business finance online platform analysed late payment trends between 2013 and 2019, examining over 100,000 invoices.

The findings suggest that businesses typically agree 45-day payment terms from completion of work or delivery of goods. In 2019, almost two-fifths (39%) of invoices were paid beyond the agreed date, a slight improvement on 2018 when 43% 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. Invoices paid late were typically larger in value (£34,286) than those paid on time (£24,624).

In addition, the number of invoices with long payment terms (anywhere between 60 and 120 days) being paid late almost doubled between 2013 and 2019, rising from 13% being paid late in 2013 to 23% in 2019.

Over the six-year period, the analysis found that larger debtors insisted on longer payment terms (49 days) than smaller debtors (37 days). In addition, when invoices were paid late, these larger debtors also settled much later (94 days) compared to smaller debtors (42 days).

Professional and legal services businesses suffered the most with late payment in 2019. Seven in ten (70%) of invoices were paid late, up from 30% in 2018. Manufacturers (57%), retailers (49%) and creative industries businesses were also heavily impacted by late payment of invoices.

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.

The analysis also 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 delayed by 32 days and businesses in China took an additional 10 days.

In contrast, French, Spanish and Italian businesses halved the number of days they paid late from 24 days late in 2018 to 12 days in 2019.

Bilal Mahmood, external relations director at MarketFinance, said: ‘Late payment practices harm business cash flow, hampers investment and, in extreme cases, can risk business solvency.

‘Separate research we’ve conducted highlighted that 87% of businesses are prevented from taking on more orders because of the cashflow constraint owing to late payments.

‘Overall it seems who you are doing business with and where they are based is important to know for a small business if they need to forecast cashflow.’

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