Posted: Thu 9th May 2019
The average small business is waiting 38 days for invoices to be paid despite 30 day payment terms, analysis of hundreds of thousands of small firms has revealed.
The latest insights by online accounting business Xero shows the average payment point for settling bills was 38.7 days in March.
Although it was up from 40.33 days in February, the data shows late payment is still a major issue for Britain's entrepreneurs. Previous analysis of two million invoices by Xero showed that the average British small business is owed £24,841 in late payments on any given day.
Dealing with the UK's late payment culture
The figures come as small business minister Kelly Tolhurst and Small Business Commissioner Paul Uppal hosted a conference call on Thursday with small business posing questions on chasing payments.
The minister was asked if the government will legislate on maximum payment terms but she said in countries where such measures have been introduced, it hasn't always solved the problem.
"There are a number of tools we need to use to change the late payment culture as well as going down the legal route," she said.
The government is due to publish its response to a call for evidence on tackling late payment soon and Tolhurst said she hoped for "a suite of measures to deal with the late payment culture".
Another caller asked what can be done to deal with small businesses not imposing interest on late payers over fears of losing future work. Tolhurst and Uppal pointed to the recent naming and shaming of big businesses that pay late.
In a passionate statement, another entrepreneur on the call said late payment is a major issue which impacts on the mental health of business owners. "The match between small and big business on late payment is not equal", he said, and there is "a need for fair and transparent measures that are critically accessible by all".
Other findings from the Xero report showed 52.8% of small firms were cashflow positive in March, up from 47.81% in February.
There was also a 1.9% increase in the number of small businesses hiring employees, while trading overseas rose by 3.8%.