Businesses in the UK have reported decreasing bad debt losses in a sign of a strengthening economic environment. On average, businesses wrote off 2.0 percent of annual revenue due to non-payment in the past 12 months; a decrease from the 4.7 percent reported by UK companies in 2017.
The findings, which are part of the European Payment Report 2018, released by the pan-European credit management firm Intrum, also show that fewer businesses report negative consequences of late payments.
Clients still pay late, but businesses seem to have become slightly more positive about their ability to handle that. That said, 42 percent of respondents say late or non-payments hinder growth, while 32 percent are unable to hire new staff as a result. In the UK 24% of polled companies cite late payment as a threat to their survival – much higher than the European average of 10%.
“More needs to be done to ensure prompt payment as it has a significant impact on the vulnerability of small and medium-sized enterprises,” said Intrum’s UK Managing Director Eddie Nott. “There is still a long way to go to ensure the growth of UK businesses is not held back by poor payment.”
The report is based on 9,607 surveyed businesses around Europe, including 452 in the UK. More than half (54 percent) of businesses in the UK say that that have been asked to accept longer payment terms than they are able to manage in their daily operations and 48 percent admit to having accepted these demands.
The European Late Payment Directive has had a positive impact on payments, according to 37% of the UK businesses polled. While this is promising, too many businesses still struggle to be paid on time.
“Legislation is important, but clearly a change in attitude and behavior is needed so that there is a willingness to do the right thing and stop taking advantage of sub suppliers who are dependent on their larger clients,” says Eddie Nott.
He adds: “Payment within 30 days. That is what the directive and local regulations stipulate. Fair payment terms are a significant ingredient in a sound economy.”
Meanwhile, British businesses were more likely than their European counterparts to say that GDPR will have an impact on payment routines. In the UK 30% of all companies surveyed expect an impact, compared with 14% across Europe. However, 21% of UK businesses also expect GDPR legislation to have a positive impact on their business.
The UK is also leading the way in cryptocurrencies in Europe, with 15% saying they already accept cryptocurrencies such as Bitcoin or Ethereum as payment from their customers, compared with the European average of 2%. Of those in the UK who do not yet take these payments, 16% expect to do so within two years – much higher than the European average of 3%.