The average British small business is owed £24,841 in late payments on any given day, while 78% are owed money at any time outside of agreed payment terms, according to research by accounting software provider Xero.
Research based on data taken from two million invoices issued by its UK small business subscriber base showed that in August the average 30-day invoice was paid after 39.67 days, almost 10 days after payment is due.
Furthermore, when reviewing overdue 30-day invoice payments the average late invoice was found to be paid 64 days after issue, more than double the payment term.
Edward Berks, EMEA director, platform business at Xero, said: “At a time when the world needs small business to succeed it’s estimated that 50,000 businesses in the UK fail each year because of cash flow issues.
“Our data shows the impact that this level of debt can have on small companies. Predicting working capital requirements still remains a challenge for small businesses and accessing finance remains expensive and time consuming. But, it is increasingly critical that the government and industry takes the right steps to ensure that small businesses get paid faster.”
He added: “New measures to crack down on big business culprits and smarter technology to automate payments will all help to alleviate the pressure on small business cash flow.”
The industry with the highest percentage of invoices paid late was found to be transport, postal and warehousing, with 68% of invoices overdue over the last year, followed by electricity, gas, water and waste services (62%) and manufacturing (60%).
The small business sector posting the largest level of late payment was wholesale and trade, with an average of £42,989 owing, with financial and insurance services ranked at number six in a top table, with an average of £29,732 outstanding.