Findings from business finance company MarketInvoice reveal that 73% of invoices sent by UK businesses to EU firms were paid late, up from 40.4% in 2016. Across the Atlantic, the number of invoices paid late by business in the USA increased from 45.7% in 2016 to 71% in 2017.
Tellingly, the number of days taken by EU firms to settle invoices (beyond payment terms) has soared 30-fold between 2016 and 2017, increasing from just 0.3 days to 9.1 days. Similarly, US firms are also taking longer to settle their bills (beyond payment terms), up from 7.1 days (in 2016) to 19.5 days in 2017.
German firms were notable late-payers. They took 28 days (the longest all of countries surveyed) on average to settle bills to UK firms. Interestingly, in 2016 they settled their bills 0.5 days early. Also, the proportion of invoices paid late has almost doubled from 38.3% in 2016 to 62.8% in 2017. French firms took 26 days (compared to 6.1 days in 2016) to pay their bills and businesses in Ireland took 13 days (compared to paying 0.1 days early in 2016).
It’s not only UK exporters that are suffering. UK businesses operating at home were also hindered by late payments. Businesses took an additional 18.4 days to pay their invoices in 2017, compared to 5.9 days in 2016. Also, the proportion of invoices paid late increased from 62.3% to 66% (2016 vs 2017).
The research examined 80,000 invoices issued by UK businesses sent to 93 countries. Overall, 62% of invoices issued by UK SMEs in 2017 (worth over £21b) were paid late, up from 60% in 2016. The average value of these invoices was £51,826 and three in ten invoices paid late took longer than two weeks from the agreed date to settle, with some taking almost 6 months to be paid.
Bilal Mahmood, MarketInvoice spokesperson commented: “UK exporters are being squeezed globally as more of their invoices are being paid late and taking longer to be settled. Businesses respect long payment terms, but late payments are unacceptable.”
“The new trading environment in 2017, with Brexit negotiations on-going in the backdrop of global economic uncertainty, could have caused some consternation amongst late-paying firms around the world. This is not an excuse to not honour their payment terms”.
“UK businesses need to understand what measures they can take to reduce the risk. These include making T’s & C’s clear from the outset, chasing payments down and enforcing the right to claim compensation from late payments.”