Late payments scandal: Average small business owed 24, 841 in unpaid invoices
The average small UK business owner is owed 24, 841 in late payments on any given day, according to a study of two million invoices.
The research, undertaken by accounting software provider Xero, lifted the lid on Britain’s late payment problem, with so-called “supply chain bullies” treating smaller companies like cash flow solutions.
Late payments worth almost 25, 000 equate to£11 months? average staff wage, 37 months of mortgage paymentsornine family holidays. Meanwhile, around 50, 000 small businesses fold every year because of cash flow problems.
The research arrives as the Department for Business, Energy and Industrial Strategy’s (BEIS) call for evidence on new proposals to tackle late payments ends today.
Commenting on the volume of unpaid invoices now owed to small businesses, economist Vicky Pryce said: In the current climate of increased uncertainty, tighter margins and a shaking out of supply chains, late payments just add to the costs of small firms, particularly now as interest rates are on an upward trend. And needing to borrow more, in an unplanned way, does little for a firm’s credit rating, making life more difficult in the future.
late payments tend to shift the balance in favour of larger firms either because they are the ones who benefit from paying late or can better withstand the working capital pressures if they themselves are having to cope with late payment of invoices by others.”
Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.
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