UK micro-business sector plagued by late payments, research shows

  • Across the whole of the UK, just over half (52%) of invoices sent by micro-businesses were paid on time
  • Peterborough revealed as the late payments capital of the UK with freelancers and micro-businesses most likely to either be paid late or not at all, for their goods and services
  • 70% of respondents felt business owners should be able to secure compensation from late-paying clients

UK freelancers and micro-business owners throughout Britain are suffering from chronic late payments from clients, new research reveals.

The research from cloud accounting software company FreeAgent – who provide award-winning software for freelancers, micro-businesses and their accountants – has revealed that UK-wide, just 52% of invoices sent during the 2017 calendar year were paid on time or within three days of their payment deadlines.

FreeAgent reviewed data from a sample of its 50,000+ customer-base and analysed hundreds of thousands of invoices that were sent in the last year to create a late payment overview of the UK.

Separate research carried out by FreeAgent has also revealed that a quarter (26%) of UK micro-businesses said that the longest they have had to wait to get paid by a client was three to six months, while 10% have had a client who has never paid them at all.

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When asked what measures should be put in place to tackle late payments, 70% of respondents said that they would like to see the government introduce a legislation which enables business owners to secure compensation from late-paying clients. 59% of respondents felt that the government should implement an official code of conduct for companies to adhere to with regard to paying clients.

Worst areas for late payment:

CityPercentage of invoices paid late
Peterborough68%
Sheffield65%
Stoke-on-Trent62%
Chester61%
Northampton60%

Least affected areas for late payment:

CityPercentage of invoices paid late
Manchester14%
Leeds19%
York28%
Nottingham34%
Bromley35%

The issue of late payment has become so prevalent that the UK government appointed a Small Business Commissioner in a bid to drive a cultural change in payment practices to ensure small businesses are treated fairly. Commissioner Paul Uppal has been allocated an annual budget of £1.4million to fulfil his remit. While it is a nationwide initiative, Uppal has identified the West Midlands as an area of priority.

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.”

“Around half of the invoices sent by micro-businesses in the UK get paid late, and there are certain areas where the issue is considerably even worse. Even in Manchester, where late payment is least prevalent, there are still many businesses who aren’t being paid on time. Some of these late payments go way beyond a week or two, with some taking months to settle invoices, or even not paying at all.”

“Micro-business owners don’t have the luxury of being able to absorb late payments into their accounts – they need to get paid promptly to keep their cash flow healthy. While the government recognises the late payment problem, the reality is that the Small Business Commissioner has limited power to actually punish companies who routinely pay their invoices late, aside from just naming and shaming them. Late payments put freelancers and micro-businesses at significant risk, and we need stricter measures in place to tackle late payment culture.”

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