Only 52 per cent of invoices sent by micro businesses are paid on time
Nearly half of Britain’s micro businesses are suffering from chronic late payments from clients.
Just 52 per cent of invoices sent during 2017 were paid on time or within three days of payment deadlines, according to research by accountancy software firm FreeAgent.
Peterborough was the worst place to do business with, as 68 per cent of micro-business invoices were paid late. Sheffield and Stoke-on-Trent were the runners up.
FreeAgent analysed data from a sample of its 50,000-strong customer base and analysed thousands of invoices sent last year.
Micro businesses are those defined as having up to nine employees.
Separate research by FreeAgent has also revealed that a quarter of Britain’s micro businesses have had to wait between three and six months, while 10 per cent had a client who has never paid them at all.
Seventy per cent of respondents said they want the government to introduce legislation that would enable business owners to receive compensation from late payers.
And 59 per cent of respondents felt the government should implement an official code of conduct for companies to follow when it comes to settling invoices.
Last December the government appointed a Small Business Commissioner to help mediate disputes between SMEs and large companies that have a culture of paying late. This week SME revealed that the SBC had helped settle £400,000 worth of invoices to date.
The government has also introduced legislation that will enable SMEs to borrow a percentage of what they are owed by creditors for the first time. Third-party financiers will be allowed to lend to SMEs against outstanding invoices.
Ed Molyneux, CEO and co-founder of FreeAgent, said: “While late payments are an issue across the UK economy as a whole, our research reveals just how widespread it is within the freelance and micro-business community.
“Micro-business owners don’t have the luxury of being able to absorb late payments into their accounts – they need to get paid promptly to keep their cash flow healthy. Late payments put freelancers and micro-businesses at significant risk, and we need stricter measures in place to tackle late payment culture.”
