On average, every UK small business is owed £24,841 as a result of late payments, according to the latest analysis from Xero’s Small Business Insights.
Xero’s director of Partner and Product, Damon Anderson, told delegates to Accountex that late payments cause a real cashflow squeeze that contributes heavily to some 50,000 small business failures a year.
He explained that the average number of days for a small business invoice to be paid in February 2019 (30-day term) was 40.3 days. The data also shows that FTSE 350 companies pay in 46 days on average, or more than two weeks late.
In the 10 years since the Prompt Payment Code was introduced he says there has been no improvement in this area. More government legislation may be needed.
In the meantime, Anderson believes that using tech such as Fluidly and iwoca will help small firms help themselves, by building real-time information, identifying cash gaps and help them get access to capital when they need it.