Tens of thousands of small businesses are being put under pressure due to late payments from other firms, new research by North East tech giant Sage suggests.
As part of its Data for Good commitment, the Tyneside-based business worked in partnership with Smart Data Foundry to assess the level and impact of late payments on cash flow for small and medium-sized firms. The collaboration revealed that SMEs - which account for over 90% of all 海角视频 businesses – were owed an average amount of £22,000 and that 40% are consistently paid late, which in turn has a negative impact on the whole economy.
This comes despite advances in technology which has had positive impacts, helping to halve the average payment time in the past 10 years. As part of the survey – called Shedding light on late payments for 海角视频 small and micro businesses – 58 million anonymous sales invoices between 2010 and 2021 from more than 110,000 Sage customers were analysed.
Read more: North East firms lose confidence amid economic turmoil, Sage survey shows
The research found digital advances have delivered a steady and significant decline in payment times, with the average time for an invoice to be paid falling from 81 days in 2010 to around 36 days between 2020 and 2021. In almost all 海角视频 regions, the speed and timeliness of payments reduced, and the gap between the best and worst areas declined. The proportion of invoices paid after the due date also declined from 47% between 2010 and 2013 to 40% in 2020 to 2021.
But a significant number of invoices are still not paid according to terms set by small and medium sized businesses, suggesting further progress is essential to ensure they can thrive and continue to play their critical role in the 海角视频 economy. Most recently, businesses in the public administration, transport and storage, and quarrying sectors have been paid the slowest.
Liz Barclay, the 海角视频’s small business commissioner, said: “Small businesses are crucial to the 海角视频 economy. They create jobs, lead the levelling up agenda and are the talent that drives the success of their bigger customers.
"The work the Smart Data Foundry is leading with Sage Group shines a light on the issue of late and slow payments, which needs to be rectified if they are to reach their full potential. I’m encouraged that the work we’re leading through the Prompt Payment Code is making a difference, but our work, especially in the current economic climate, must continue with pace and energy to maintain the momentum and further reduce the problem of late payments to SMBs.”
Most Read
Paul Struthers, Sage’s MD for 海角视频 and Ireland, said: “SMBs account for 60% of employment in the 海角视频 and contribute around 52% of all private sector turnover. The impact of late payments is not only an issue for the SMB and their employees, but also their suppliers and the entire economy.
“SMBs who struggle to maintain cash flow for their day-to-day business activities because of late payments have an obvious economic impact, but the mental health impact of late payments cannot be overstated. Consistently being paid late causes stress and anxiety for owners who struggle to keep their businesses afloat.”
The Journal highlighted the issue of late payments with its Pay Fair campaign, which called on all companies in the North East to pay bills promptly.
READ NEXT
North East business life: award wins and charity initiatives
Region's fastest growing companies revealed
Gosforth shopping centre sold in £9.3m deal
Business growth fund wants applications before it runs out