More than half (52 per cent) of UK business owners worry about unpaid invoices, with the worst-affected regions found to be London, where businesses spend 1.5 days per month chasing payments, followed by 1.3 days by businesses in Wales, according to a study by Xero.
The business sector spending the most time chasing payments is HR (three days), followed by IT and telecoms (1.8 days) and manufacturing and utilities (1.7 days).
The two main reasons cited by small businesses as being the causes of late payments are that their customers were also waiting for payments themselves (32 per cent), as well as a lack of consistency on payment terms (27 per cent).
Late payment causing reduced productivity?
More than a third (37 per cent) of respondents named that a reduction in productivity is a knock-on effect from late payments and subsequent cash flow problems, with loss of money (25 per cent) and a backlog of work (20 per cent) also recognised as negative effects.
Emma Jones, founder of business community Enterprise Nation says, ‘Nearly 60 per cent of all UK small business invoices were paid late in 2015, which can cripple and often close a business within its first few years.
‘The late payment epidemic the UK is facing has to change so small business founders don’t spend so many hours chasing doubt and worrying about cash flow on the back of late payment. With small businesses making up a staggering 99.8 per cent of the British economic engine, this is a critical issue to sort for the betterment of the UK economy as a whole.’
Gary Turner, co-founder and UK managing director of Xero adds, ‘Brits spend more in online retail per shopper than any other country, but the UK has a dismal productivity rating compared to the rest of the G7 nation.
‘Our recent research has proved that small businesses are continuing to waste time chasing payments, only adding to the problem with productivity we face in this country.’