UK freelancers and small enterprise house owners proceed to be suffering from the issue of late fee, in response to new analysis.
Evaluation of invoices despatched by accounting software program firm FreeAgent‘s small enterprise prospects between June 2022 and June 2023 has revealed the startling influence of late fee on the UK’s SME sector – with just below half (43%) of invoices despatched over the previous 12 months have been paid late.
The analysis reveals that Harrow is the world worst affected by the late funds disaster – with 64% of invoices despatched throughout the previous yr paid late – carefully adopted by Guildford, Nottingham and Liverpool. In distinction, Ipswich is least affected by late fee, with simply 5% of invoices despatched by small companies inside the IP postcode paid late.
Trying on the nationwide image, each England and Wales have the bottom charge of late fee (43% of invoices paid late), carefully adopted by Scotland. In distinction, Northern Eire is the worst nation within the UK for late fee, with 55% of invoices despatched over the previous 12 months paid late.
Whereas the outcomes present a slight enchancment to the identical analysis carried out by FreeAgent in 2020 – when 46% of UK invoices have been paid late – they present that late fee remains to be one of many greatest challenges going through UK SMEs three years later. The corporate believes that the late fee subject is very perilous as many SMEs are nonetheless recovering from the results of the COVID-19 pandemic and battling the continued cost-of-living disaster.
Roan Lavery, CEO and co-founder of FreeAgent, mentioned: “Whereas it’s actually optimistic to see a slight drop within the stage of late fee in comparison with 2020, it stays the case that round half of invoices are nonetheless not being paid on time. That represents an enormous variety of SME house owners and freelancers whose companies are unnecessarily being put in jeopardy.
“Sustaining a wholesome money circulate is the primary precedence for anybody working a enterprise and, should you’re not being paid on time for the work that you just do, it may be extremely tough to do that. The overwhelming majority of small companies merely don’t have the luxurious of with the ability to soak up late funds into their accounts – they should receives a commission promptly to maintain themselves afloat.
“Our information reveals that round half of the invoices despatched by small companies within the UK receives a commission late, and there are specific areas the place the difficulty is significantly worse. A few of these late funds go method past every week or two, with some invoices taking months to settle and even not being paid in any respect.
“In our present unstable financial local weather, and with enterprise house owners persevering with to really feel the influence of excessive inflation, rates of interest and the cost-of-living disaster, it’s extra necessary than ever for them to be protected. Late fee needs to be one of many greatest priorities for the federal government to deal with, so we urge them to introduce new laws and important penalties to assist deal with the difficulty as soon as and for all.”
A separate survey of small enterprise house owners carried out by FreeAgent has additionally revealed among the potential legislative options that SMEs wish to see applied to deal with late fee within the UK.
Among the many hottest options have been higher entry to authorized help and providers, harsher monetary penalties for late payers, mandating the Immediate Fee Code for all personal sector contracts and the introduction of an official star ranking displaying how shortly corporations pay their purchasers. As well as, 1 / 4 of enterprise house owners surveyed mentioned they wish to see the federal government create a brand new, devoted fund to guard small companies from late or non-payers.
The survey additionally highlighted SME dissatisfaction with politicians over the difficulty, with 61% of respondents saying they didn’t suppose the federal government was taking the difficulty of late fee critically – and 38% saying they didn’t know whether or not it was. In distinction, simply 1% of individuals surveyed mentioned they thought the federal government was dedicated to serving to SMEs take care of late fee.