Small firms are owed 60% of turnover in late payments
New research from the Intuit QuickBooks quarterly research publications, the Late Payments Bulletin, reveals late payments are continuing to have a significant impact on UK small businesses – with the smallest businesses being some of the worst hit.
Overall, it shows that small and medium-sized businesses (SMBs) with at least one overdue invoice were owed £21,356 in late payments on average in September 2021– almost two thirds (62%) of the average SMB’s typical monthly turnover.
The research also found that the average amount owed to SMBs in late payments has risen 11% year-on-year, up from £19,224 in September 2020, as the challenges experienced during recent lockdowns continue to have a significant impact. Almost two thirds (64%) of the invoiced amount owed to small businesses was overdue in September.
The research found that micro-businesses (those with turnover of between £1k - £19k) are some of the worst-hit by late payments from customers and clients – and that this is getting worse.
· Small businesses owed £21,356 in late payments in September – 62% of their turnover
· The smallest businesses are hit hardest with highest proportion of invoices owed
· Micro-businesses are owed 60% more in late payments than the last year, despite stronger economic growth
Micro-businesses are owed considerably more compared to last quarter, with the average amount owed rising 26% in September to £2,400, from £1,900 in May 2021. Over the last year the gap has grown considerably, with the average amount owed rising 60% from £1,500 in September 2020.
Two fifths (41%) of micro-businesses’ invoices due in September were still overdue at the time of reporting. As a result, the smallest businesses are looking to speed up payments by tightening their payment deadline terms. Close to half (43%) of micro-businesses now require instant payment, and this has been steadily on the rise throughout 2021.