This morning Market Finance revealed that small and medium-sized businesses are waiting twice as long to be paid in 2019, with firms having to wait an average of 23 days to receive their money, up from 12 days in 2018. Interestingly, fewer invoices were paid late in 2019 but worryingly, those that were late took twice as long.
Tim Vine, European Head of Finance & Risk Solutions, Dun & Bradstreet, said: “Late payments put immense pressure on cash flow and the financial stability of a business, especially SMEs. Although there has been more discussion on tackling late payments – with progress such as the government’s promise to pay its own suppliers in a timely way and the introduction of a 30-day payment deadline – it’s still a very real problem for many small and medium businesses. Late payments critically affect the health of a business; UK companies spend 56.4 million hours looking for overdue payments and a survey commissioned by Dun & Bradstreet found that nearly half of SME respondents felt that overdue payments put their business at risk of failure.
“The latest payment performance information in Dun & Bradstreet’s Q3 UK Industry Report supports the survey findings from Market Finance and shows an improvement in payment trends for the trade data analysed. The average percentage of payments made on time has increased from 37.2% at the beginning of 2019 to 44.7% in Q3. All 14 sectors covered in the report saw quarter-on-quarter improvements with the most significant increase in the financial sector, where payment performance improved by 6.3%, followed by business services (6% increase) and the health, education and social sector (up 5.3%).
“By understanding the previous payment behaviour of customers and using predictive analytics to get a view of future performance, businesses can mitigate the potential impact that late payments can have on their cash flow and plan accordingly.”