Late payments rise.
James Salmon, Operations Director.
UK SMEs owed £130,000 on average in late payments
According to a survey of 753 small businesses in the UK from Dun & Bradstreet small businesses are owed on average a massive £130,445.05 in late payments!
In fact, in 2020, over a fifth of invoices due to the SMEs surveyed – whether the creditor was large or small or even public sector – were paid late.
Given that late payments have significant repercussions on the cashflow and operation capability of small-to-medium-sized businesses, this needs to be resolved.
After all, over half (51%) of SMEs rely on suppliers making payments on time to remain solvent, while the same number (51%) claim late payments affect the productivity of their business overall.
What is more, a fifth (23%) of small business owners have had to use their own personal savings or assets to cover the shortfall of late payments. Almost doubling from 13% in 2019.
Of course the covid 19 pandemic has been a major factor , in part for the rise in late payments. While 2019 saw an improvement in late payments from 2018, with an 8% decrease in late payments overall, last year’s late payments for SMEs grew by a staggering 76%.
Analysis of Dun & Bradstreet trade payment data also shows a marked decrease in prompt payment performance since the first lockdown in March 2020, with the percentage of UK businesses paying bills on time down from 47.3% in March to 41.8% in December 2020 highlighting the increasingly difficult payment situation SMEs had to contend with in 2020.
Tim Vine, Head of International Finance & Risk Solutions at Dun & Bradstreet, said: “Britain is a nation of shopkeepers, so the impact of the pandemic on its small businesses has been felt most acutely. After a year of operating under crippling lockdown restrictions, the vast majority will be on a financial knife edge and pinning all hopes of recovery on consistent and reliable access to finance.
“But with late payments skyrocketing, that hope hangs in the balance, and it will be up to the UK Government to implement its reforms to the Prompt Payment Code sooner rather than later in order to guarantee their survival. As we approach June 21st, it’s imperative that small-to-medium-sized businesses are paid what they are owed, and on time, so they too can open their doors once again.”
Looking ahead, many SMEs want to see more vigorous action taken to tackle late payments. Almost six-in-ten (58%) feel companies should be penalised financially if they pay late, and that the Government should be implementing stronger sanctions to that effect. In fact, over half (54%) believe stronger sanctions is necessary to prevent late payments in future.
CPA through its associated company CPA (LPC) recoveries is doing just that, collecting late payment compensation from late payers for our clients.
Debt falls by almost one third since first lockdown
Despite the above, a separate survey shows that for individuals, average outstanding unsecured credit balances have dropped by 32% over the past year of enforced covid-19 lock-downs.
Experian CreditExpert customers had an average credit balance across all accounts (excluding mortgages) of £7,851 in March 2021, compared to £11,615 in March 2020. Debts have continued to reduce since June last year, when credit balances averaged £9,681.
With consumers not traveling, eating out, or physically shopping for non-essentials because of the restrictions, it is perhaps understandable.
James Jones, Head of Consumer Affairs at Experian, said: “It’s encouraging that borrowers have managed to reduce the balances on their credit cards and loans, with lockdown impacting day-to-day spending and saving habits. As a result, many have improved their credit score and financial position more generally.
“While some people have been able to improve their financial position, we know many have struggled, especially where incomes have been hit. Our advice to people with money worries is to seek support and contact their lenders without delay. The sooner there’s a plan in place, the sooner you’ll be back in control of your finances”.
Why should you become a CPA member!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for some time to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers.
Unlike other credit management companies, we charge our members a fixed annual subscription irrespective of how high the debt value is!
It takes less than 17 minutes to see how you would benefit, do you have the time now?
No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Get compensated for previous late payments
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
You put up with the PAIN – now claim the GAIN!
Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.