New report highlights the consequences of late invoice payments

The report, entitled Invoice Utopia, includes detailed YouGov polling of 1,233 British businesses, and sheds new light on the consequences of poor invoice processes.

The report highlights the consequences of late invoice payments, with businesses being forced to take action to protect cash flows. Responding to the problem companies said they would have to take the following steps: making redundancies (7%), stopping planned investments (17%), being unable to pay salaries (15%) and significantly reducing innovation spend (10%).

A key finding of the report is that 40% of British businesses said they have received a late payment in the last month, a trend which could undermine job creation.Such a high volume of late payments is significantly worrying when 57,960 businesses each year – 23% of the total number of business deaths – is currently caused by late payments.

The consequences of late payment culture were also exposed with 32% of businesses saying they would feel a significant impact if their biggest customer did not pay an invoice for 90 days – a relatively common occurrence.
Moreover, the research discovered that 63% of medium sized businesses (50-249 employees) receive late payments at least once every month, compared to 40% of small businesses, dispelling the myth that smaller companies are often worst hit.

The polling revealed that 21% of medium sized businesses said they would have to stop planned investment if their biggest customer failed to pay a substantial invoice for 90 days, 14% saying that they would not be able to pay salaries and 15% significantly reducing innovation spend. Most worryingly, compared to 6% in small businesses and 7% in large businesses, 11% of medium sized companies said they would also be forced to make redundancies.

Taking into account the business size of those deaths the report shows that approximately 353,000 jobs are being lost per year, or GBP 549 million through lost taxation capital. This figure does not include the average of 130 hours, or 16 working days, spent by the typical SME chasing late payments, meaning the overall impact of late payments could be substantially higher.

73% of the businesses researched were affected by late payments – 46% in the last month. Once more, medium businesses, along with enterprise, were affected more than small business (63% for medium businesses, compared to 49% of large businesses and 40% for small businesses in the last month).

In parallel, medium-sized businesses are also the worst in regards to paying late, highlighting their reliance on steady cash flow. 56% of medium-sized businesses admitted to paying late at least once a year, in contrast to 47% at enterprise level – traditionally seen as the worst at paying on time.