New research shows late payments are continuing to have a significant impact on UK small businesses – with the smallest businesses hardest hit.
Overall, research by Intuit QuickBooks found that SMEs with at least one overdue invoice owed an average of £21,356 for late payments in September – nearly two-thirds of their average monthly turnover. small and medium enterprises.
The study also found that the average amount charged by SMBs for late payments increased by 11% year-on-year, up from £19,224 in September 2020, due to challenges experienced during the lockdowns. Recent accounts continue to have a significant impact. Nearly two-thirds of the money billed to small businesses was past due in September.
Micro businesses hit hardest by late payments
Research shows that micro businesses (those with a turnover of £1k – £19k) are among the hardest hit by late payments from customers and customers – and this is getting worse and worse.
Micro businesses are significantly more indebted than the previous quarter, with the average amount of debt growing by 26% in September to £2,400, from £1,900 in May 2021. Last year, the gap was the same. has grown significantly, with the average amount of debt up 60 per cent from £1,500 in September 2020.
Two-fifths (41%) of microbusiness bills due in September are still past due at the time of reporting. As a result, the smallest businesses are looking to speed up payments by tightening the terms of their payment deadlines. Almost half of all micro businesses now require instant payments, and this is steadily 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, especially in dealing with customers in the hospitality and hospitality sector. entertainment – which is under special pressure.
“It was a difficult situation for us, because we sympathized with their plight and didn’t want to pursue them and raise interest. On the other hand, we’ve done the job and paid the employees and related expenses, haven’t seen a dime back yet. We don’t have many options for dealing with late payments and in the worst case write offs. Service providers like mine need as much help as possible, especially since we are also fighting to recover from the impact of the pandemic.”
Chris Evans, UK Vice President and Country Manager at Intuit QuickBooks, said: “It is worrying that late payments are getting worse for the smallest businesses. With tighter margins and limited cash flow, these businesses will be hit hardest by unpaid bills. Many micro businesses are reducing payment deadlines to try to fix this problem, but it doesn’t seem to work as expected.
