More than a quarter of all invoices are being paid late, according to new official statistics, leaving small businesses struggling for cash on a regular basis.
The average reported time to pay was 38.97 days with just over half of all invoices being paid within 30 days. Approximately one third of invoices were paid between 31 and 60 days, with just over 15% of invoices being paid later than 60 days.
However it is notable that more than one quarter of all invoices were paid beyond the agreed terms. The issue here for SMEs is not necessarily the payment terms themselves, which can be factored into cashflow forecasts and financial planning, but rather the sheer uncertainty of when they can expect to receive over one quarter of their generated revenue. Most SMEs will have critical pinch points throughout the year when the cash must be in their bank accounts to cover important costs such as rent quarter payment, VAT, Corporation Tax as well as the monthly wage bill and day to day trading costs.
Cashflow finance such as an invoice finance facility would go a long way to negating problems experienced by businesses who are facing cashflow difficulties, enabling them to immediately draw down funds against invoices raised, so that payments can be made as and when they fall due – rather than having to regularly defer payment terms due to continual late paying customers.
Harrisons Finance is a commercial brokerage with offices in Manchester, London and Reading, specializing in sourcing bespoke funding facilities for our clients who range from small owner managed businesses and SMEs through to larger businesses and national corporates.
Our team of finance specialists cover a whole spectrum of financial products and business sectors. Whether it be raising finance for a new startup, financing growth, providing turnaround capital or seeking to refinance to a more suitable provider or financial product, through our extensive experience and network of contacts in the finance sector, we are well placed to provide the most appropriate solution for your business.
For a free funding review, please either call us on 0845 601 5343 or email email@example.com to book an appointment.