New research has revealed that late payments continue to have a significant impact on UK small businesses, with smaller businesses being some of the hardest hit.
Overall, Intuit QuickBooks research shows that small and medium-sized businesses with at least one overdue invoice were owed £ 21,356 in late payments on average in September, almost two-thirds of the average monthly turnover for SMEs.
The research also found that the average amount owed to SMEs in late payments has increased by 11% year-on-year, up from £ 19,224 in September 2020, as the challenges experienced during recent closings continue to have a significant impact. Almost two-thirds of the billed amount owed to small businesses was past due in September.
Micro-enterprises are the most affected by late payments
The research found that micro-businesses (those with a turnover between £ 1,000 and £ 19,000) are some of the hardest hit by late payments from clients and clients, and that this is getting worse.
Micro businesses are owed considerably more compared to last quarter, with an average amount owed increasing 26% in September to £ 2,400, from £ 1,900 in May 2021. Over the past year, the gap has grown considerably, and the average amount owed has increased 60% from £ 1,500 in September 2020.
Two-fifths (41%) of microenterprise invoices due in September were still past due at the time of reporting. As a result, smaller companies are looking to speed up payments by adjusting their payment terms. About half of micro-businesses now require instant payments, and this has been increasing throughout 2021.
Harry Pill, founder of Fresh Cut Video, said: “We are still feeling the impact of the pandemic when it comes to late payments, particularly in dealing with customers in the hospitality and entertainment sector, which has been under a particular pressure.
“It is a difficult situation for us, as we sympathize with their difficult situation and we do not want to pursue them and add interest. On the other hand, we have done the work and paid the personnel and expenses involved, but we have not seen a penny. We don’t have many options to deal with late payments and in the worst case, we may have to cancel it. Service providers like my company need as much help as possible, especially as we are also fighting to recover from the impact of the pandemic. “
Chris Evans, UK Vice President and Country Director for Intuit QuickBooks, says: “It’s worrying to see late payments getting worse for smaller businesses. With tighter profit margins and limited cash flow, these companies will be hit the hardest by unpaid bills. Many micro-businesses are reducing their payment terms to try to combat the problem, but it seems that this is not having the expected effect.