Late payment issue affects one in every six invoices, claims R3
- Credit: Archant
East of England business victims of late payment saw more than one in six (16%) of their invoices paid late in the last six months, according to research by insolvency trade body R3.
With the national figure standing at a similar level (15%) and with earlier research finding that late payment is a primary or major factor in one-in-five (20%) corporate insolvencies, the eastern branch of R3 believes more should be done to eradicate the practice.
R3 eastern chairman Frank Brumby, a director at Isadore Goldman in Norwich, said: “Late payment puts unnecessary strain on cash flow and, despite government guidelines and business campaigns, it remains all too common an issue.
“A year ago, the Federation of Small Businesses found half of its members had been paid late in the previous year. Although the government is keen to make an impact on late payment, progress has been disappointingly slow over 2014 and 2015.”
Nationally, the R3 research reveals that sole trader late payment victims are most likely to have invoices paid late, seeing an average of 17% of invoices overdue for payment in the last six months. Similar businesses employing over 250 people had an average of 12% of invoices paid late.
John Allan, national chairman of the Federation of Small Businesses (FSB), said: “The weight of evidence showing the damage poor payment practices are having on the UK economy grows greater each day, with the amount owed in late payments now at £41.5 billion.
“Once again, we find it is sole traders and smaller firms which are facing the brunt of late payments, and this is putting viable businesses at risk of closure.
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“Addressing the UK’s poor payment culture, particularly among large companies towards their smaller suppliers – must be a top priority for the new government. Small businesses see progress on payment practices as a key benchmark of success for the new administration.”