Small business owners call for late payment culture change
Just half of the invoices sent during 2017 by micro-firms were paid on time or within three days of payment deadlines, new research has revealed.
FreeAgent, which published the research, said late payments are putting freelancers and the smallest businesses at “significant risk”.
The accounting software supplier has also called for stricter measures in place to tackle late payment culture.
Its research, based on a pool of some 50,000 small business customers, shows that just 52 per cent of invoices were paid on time in 2017.
Meanwhile, a quarter of micro-businesses – defined as having nine employees or less – have had to wait between three and six months to be paid, while 10 per cent of small businesses have had an invoice which has never been paid.
The research follows the introduction of the Small Business Commissioner in December 2017, which was launched to ensure fair payment practices for Britain’s 5.7 million small businesses and support them in resolving their payment disputes with larger businesses. The most recent data suggests the office has helped small businesses settle around £400,000 of invoices.
But FreeAgent customers believe that the Government should do more to bring about culture change.
Some 70 per cent of small business owners said they would agree with legislation that would enable business owners to receive compensation from late payers, while 59 per cent believe the Government should implement an ‘official code of conduct’ for companies to follow when it comes to settling invoices.
Ed Molyneux, CEO and co-founder of FreeAgent, said: “While late payments are an issue across the UK economy as a whole, our research reveals just how widespread it is within the freelance and micro-business community.”
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