Nearly half of all invoices are being paid late

Nearly half of all invoices are being paid late

Small business owners and freelancers continue to struggle with their own cashflow due to receiving late payments with stats showing that 49% of all invoices are being paid late, which is a 6% increase on the previous year.

It also seems that where the business is located is a factor, with business owners and freelancers in parts of London being hit the hardest, with the late payments crisis hitting a staggering rate of 73%.

SMEs are increasingly upset about the time it takes to pay invoices, with a quarter of these businesses stating that they had, at some point, felt the future of their business was in jeopardy because they were not getting paid on time.

The software company FreeAgent have said: ‘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 seems that this isn’t just a case of payments coming a few days or weeks late, some invoices take months to settle up and some won’t be paid at all.

A recent survey conducted found that 55% of SMEs felt that the small business commissioner did not have enough powers to deal with the issue of late payment, but less than half (46%) thought that the prompt payment code (PPC) should be made mandatory for all businesses to follow.

The importance of payment terms and not letting anyone ‘run up a bill’ with your business is essential. If you are not sure about invoicing terms or about asking for some money ‘up front’ with new clients or clients you do not know then contact your accountant for ideas – here at Kennedys Accounting, we are pleased to work with our clients to support them in their businesses.