In the red: Late payments leave half of small firms with negative cash flow
Up to 15 per cent of small business turnover could now be tied up in late invoice payments
Small businesses were paid an average of ten days late for each invoice in 2017, new research has revealed, leaving half in negative cash flow at some point.
After analysing the invoice data of its customers, accounting software provider Xero discovered that small businesses across the board were experiencing late payments.
Furthermore, some of the culprits of late payments are in fact larger companies, and those inside of the FTSE 350 were paying small suppliers an average 16 days later than agreed.
On average, FTSE 350 firms paid smaller businesses on 30-day terms over two weeks late at 46 days.
At the launch of Xero’s research, Business Advice heard TV Dragon Sarah Willingham deliver some cash flow truths to entrepreneurs
Commenting on the late payment problem, Vicky Pryce, economist and previous director general for economics at Xero, said: The impact of late payments on the economy cannot be exaggerated.
work done by the European Commission looking at both business to business and government to business payments found that late payments were directly associated with worsening firms? cash flow positions, and particularly for’smaller firms.”
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Small business suppliers beware: The FTSE 350 sectors failing to pay small firms on timeBritain’s late payment crisis is continuing to hamper cash flow, growth plans and even survival rates of the country’s small firms. New data has provided yet more evidence of the task facing government.
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Negative cash flow
Last year, over half ofbusinesses were in negative cash flow in January. During the time of the year associated with increased festive spending, lower productivity due to annual leave, impending tax, and VAT payments, and year-end bonuses.
many are left with no option but to request extensions of overdraft facilities and increases in their financing costs and in bank borrowings. Late payments prevent the economy from reaching its productive potential? Pryce added.
Carly Hacon is a reporter for Business Advice. She has a BA in journalism from Kingston University, and has previously worked as a features editor for a local newspaper.
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Up to 15 per cent of small business turnover could now be tied up in late invoice payments
Small business suppliers beware: The FTSE 350 sectors failing to pay small firms on time
Britain’s late payment crisis is continuing to hamper cash flow, growth plans and even survival rates of the country’s small firms. New data has provided yet more evidence of the task facing government.
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