A new study by MarketFinance into the late payment of invoices across UK SMEs shows that the manufacturing industries, which includes printing, suffered from late payment on 57% of invoices during 2019.

The report, which analysed 100,000 invoice payments, also found that although the number of late payments appears to have decreased in the past 12 months (39%) compared to 2018 (43%), the length of time businesses are left waiting beyond their agreed terms, typically 45 days, has doubled from 12 days to around 23 days.

According to the finance company’s findings, the the number of invoices with long payments terms, from between 60 and 120 days, being paid late almost doubled between 2013 and 2019. Rising from 13% being paid late in 2013 to 23% in 2019.

The study also revealed that a staggering £34bn worth of late payments is owed to UK SMEs, which works out at around £34,286 per business. 

Launceston-based KCS Print managing director Zoe Deadman said that late payments affected businesses ability to offer the best prices as time is wasted in chasing late payers. 

“We take a tough line,” she stated. “As an SME we don’t have the resources to spend hours chasing companies to fulfil their side of the contract. Instead we dedicate our time to working with responsive companies that share our values and want to develop a mutually beneficial relationship. Thankfully there are many still around.”

She added: “Unfortunately it is the largest companies that are often the worst, using their buying power to try and push the terms and then going beyond them. Often when you stand by your terms of business you earn more respect than caving in to demands for 60- or 90-day payments. It is our duty to protect ourselves from these pressures." 

Meanwhile, Kendal-based SME printer Printing Plus has also devised methods to try to avoid the impact of late payments.

“We have minimised the problem of payment collection by sending online payment links,” explained director Howard Turner. “These make it easier to request payment with order and to chase overdue payments.”

Last year the government announced, in its Spring Statement, proposals for tackling late payment to small business with new requirements for large firms to publish their payment practices in annual reports and to appoint non-exec directors with responsibility for reducing late payments to small suppliers.

BPIF chief executive Charles Jarrold said that while politics “for obvious reasons” had interfered with the government's ability to pursue a more rigorous approach to late payments, the fact that it had identified and set out a course of action at least confirmed that they were continuing to try to help businesses by addressing the issue.

“It is encouraging that government listened to business, and is committed to further changes, and we'll be picking it up again as the dust settles after the last election,” he said.

He added: “Late payment remains a scourge of UK businesses, especially SMEs. Our own Printing Outlook reports that late payment remains a major concern - it ranked 3rd in our most recent industry survey, behind Brexit and pricing pressures, so it's a big issue.

“The government recognise the problems and challenges presented by the issue of late payments, and held a consultation back in November 2018, to which the BPIF responded robustly.  We want to see a much more rigorous approach to both reducing the payment terms that our sector too often has to agree to, and much better compliance with terms once agreed.”

Commenting on the study findings, MarketFinance’s external relations director, Bilal Mahmood, said late payment practices harmed business cashflow, hampered investment and put some SMEs at risk of insolvency.  

“SME owners have come to expect long payment terms, but late payments are inexcusable,” said Mahmood. “For every day an invoice is late, it’s more time spent chasing payment. This means less time for business owners to focus on growing their business, coming up with innovative ideas and hiring more people, or just paying their staff and bills. Things need to change quickly,” Mahmood said.

“We want the UK to be the best place in the world to start and grow a business, but the UK’s small-to-medium-sized businesses are hampered by overdue payments. Such unfair payment practices impact a business’ ability to invest in growth and have no place in an economy that works for everyone.”