SMEs ‘plagued’ by late payments

UK freelancers and small business owners continue to be plagued by the problem of late payment, according to new research by cloud accounting software company Freeagent. Analysis of over two million invoices sent by FreeAgent customers between January 2019 and June 2020 has revealed the “startling impact” of late payment on the UK’s small business sector - with just half (54%) of invoices sent over the past 18 months paid on time. The research shows that Liverpool is the area worst affected by late payments - with 66% of invoices sent during the past 18 months paid late - closely followed by Sheffield (63%) and Eastern Central London (62%). In contrast, Ipswich is least affected by late payment, with just 7% of invoices sent by small businesses in the city paid late. The data also revealed that the total number of invoices paid to small businesses over the April - June 2020 lockdown period compared to previous quarters has plummeted by a third (33%). In addition, the sector experienced a slight increase in late payment over the same period, with just 51% of invoices paid on time from April-June. FreeAgent said this highlights “just how badly affected” the small business sector has been by the pandemic, and why the issue of late payment needs to be addressed as an equal priority to wider Covid-19 support. Ed Molyneux, CEO and co-founder of Freeagent, said: “With the UK economy reeling from the Covid-19 pandemic and many businesses looking nervously ahead at a potential ‘no-deal’ end to the Brexit transition period, it’s easy to overlook the other challenges facing our small business sector. “However, it’s vital that we do not brush the issue of late payments to one side. Failure to be paid on time remains one of the most widespread and devastating problems for freelancers and small businesses, and very little has been done so far to address the issue.” He added: “Our data shows that around half of the invoices sent by small businesses in the UK get paid late, and there are certain areas where the issue is considerably worse. Some of these late payments go way beyond a week or two, with some invoices taking months to settle or even not being paid at all.”