- August 21, 2024
- Posted by: legaleseblogger
- Category: Related News
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SME business owners facing increasing late payment issues
SME business owners continue to be plagued by the problem of late payment, according to new research.
Analysis of invoices sent by small business customers between June 2023 and June 2024 has revealed the startling impact of late payment on Wales’ SME sector, with almost half (48%) of invoices paid late. This is up from 43% in the twelve months prior, representing a 11.6% increase in invoices being paid late.
The situation has become more challenging for SMEs in Llandudno, the city worst affected by the late payments crisis in Wales, where 51.2% of invoices were paid late in the past year. On the other hand, Llandrindod is the city least affected by late payment, with just 32.2% of invoices not paid on time.
Across the UK, Scotland and England have lower rates of late payment at 48.5% and 49.3% respectively, after Wales. In contrast, Northern Ireland is struggling the most with late payments, with a staggering 62.4% of invoices being paid late over the last 12 months.
The UK’s overall average late payment rate stands at 49.3%, higher than previous years, indicating a growing problem for small business owners post-COVID and in the current cost-of-living crisis era.
How AI legalese decoder Can Help
The AI legalese decoder can assist SME business owners in tackling late payment issues by translating complex legal jargon in contracts and agreements into plain language. By providing a simplified understanding of payment terms and contractual obligations, the AI tool empowers business owners to negotiate fair payment terms and take proactive steps to address late payment concerns. Additionally, AI legalese decoder can provide insights on relevant legislation and regulations, offering guidance on legal actions that can be taken to enforce prompt payment and protect SMEs from financial risks associated with late payments.
CEO’s Call for Action
Roan Lavery, CEO and co-founder of FreeAgent, expressed:
“Maintaining a healthy cash flow is the number one priority for anyone running a business. However, the vast majority of small businesses simply don’t have the luxury of being able to absorb late payments into their accounts – they need to get paid promptly to keep themselves afloat.
“It’s therefore very concerning to see that the level of late payment has increased in recent years, and that nearly half of invoices in both Wales and across the rest of the UK were not paid on time over the past 12 months. This isn’t just a case of payments coming a few days or weeks late, as some of these invoices take months to settle up or – in some cases – won’t be paid at all. Looking across the country’s five million-strong small business sector, it’s clear to see just how big of a concern this is for the UK.
“Our economy remains in a fragile state, with many small businesses still feeling the impact of major disruption caused by the Covid-19 pandemic and the cost-of-living crisis, so it’s more important than ever to ensure that SMEs are protected and supported. I hope, therefore, that our new government will commit to bringing in new legislation or putting more resources into the Small Business Commissioner’s remit, so that the chronic issue of late payment can be properly tackled.”
Survey Insights on Late Payment Impact
A separate survey conducted by FreeAgent among small business owners highlighted the significant impact of late payment on SMEs in the UK. Around a quarter (24.6%) of respondents expressed concerns about the future of their businesses due to delayed payments.
The survey also revealed that a majority of respondents (55.4%) believed that the Small Business Commissioner should have enhanced powers to address the late payment issue. Additionally, 46.1% of respondents supported making the Prompt Payment Code mandatory for all businesses. Some respondents suggested incentivizing more companies to join the PPC rather than enforcing mandatory compliance.
This research was conducted by cloud accounting software company FreeAgent.
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