Almost half of all businesses in the North (49 per cent) have had invoices paid late by customers in the past six months, according to research by R3, the trade body for insolvency practitioners.
The survey shows that victims of late payment have on average ten per cent of their invoices paid late. It comes amidst growing concern about the effects of late payment on businesses, in particular small firms. Previous research by R3 has found that late payment is a primary or major factor in one out of every five business failures.
Richard Wolff, North West chair of R3 and Head of Corporate Recovery and Insolvency at law firm JMW, said: “Late payment puts an unnecessary strain on a business’ cash flow, often increasing the risk of insolvency. Despite government guidelines and business campaigns, late payment still remains all too common in the UK. Debtor businesses know how much it costs others to chase debts yet feel they can still get away with it.
“Our research supports the view that the smallest companies bear the brunt of late payment and they are the ones who usually can least afford to – even just one sizeable invoice paid late can have a disproportionate impact on them, compared to a larger company.”
John Allan, National Chairman of the Federation of Small Businesses (FSB), says: “The weight of evidence showing the damage poor payment practices are having on the UK economy grows greater each day with the amount owed in late payments now at £41.5 billion. Once again we find it is sole traders and smaller firms which are facing the brunt of late payments and this is putting viable businesses at risk of closure.
“Addressing the UK’s poor payment culture – particularly among large companies towards their smaller suppliers – must be a top priority for any new government. Small businesses see progress on payment practices as a key benchmark of success for the new administration.”
The survey was carried out by BDRC Continental which interviewed 500 UK businesses including 108 based in the North.