UK small business sector still plagued by late payment issues

  • New research reveals that only half (54%) of all invoices sent by UK freelancers & small businesses in the past 18 months were paid on time
  • Liverpool is the worst area affected, with 66% of invoices paid late. Ipswich is the least, with 7% paid late
  • Small business sent a third fewer invoices during lockdown

UK freelancers and small business owners continue to be plagued by the problem of late payment, according to new research by cloud accounting software company FreeAgent.

Analysis of over 2 million invoices sent by FreeAgent customers between January 2019 and June 2020 has revealed the startling impact of late payment on the UK’s small business sector - with just half (54%) of invoices sent over the past 18 months paid on time.

The research shows that Liverpool is the area worst affected by late payment - with 66% of invoices sent during the past 18 months paid late - closely followed by Sheffield (63%) and Eastern Central London (62%). In contrast, Ipswich is least affected by late payment, with just 7% of invoices sent by small businesses in the city paid late.

The data also revealed that the total number of invoices paid to small businesses over the April-June 2020 lockdown period compared to previous quarters has plummeted by a third (33%). In addition, the sector experienced a slight increase in late payment over the same period, with just 51% of invoices paid on time from April-June.

FreeAgent says this highlights just how badly affected the small business sector has been by the pandemic, and why the issue of late payment needs to be addressed as an equal priority to wider Covid-19 support.

Worst areas for late payment

City Percentage of invoices paid late
Liverpool 66%
Sheffield 63%
London EC (London Eastern Central) 62%

Least affected areas for late payment

City Percentage of invoices paid late
Ipswich 7%
Manchester 10%
York 25%
Leeds 32%

Separate research conducted by FreeAgent also suggests that the small business sector is becoming increasingly frustrated with the government’s response to the late payment issue. In a survey of more than 1,200 UK small business owners, just 6% of respondents said that they thought elected officials were taking late payment for small businesses seriously - and nearly a quarter (22%) said they would like to see new legislation and harsher penalties introduced to specifically target late payers.

In addition, the survey found that just 2% of small businesses said they thought the UK’s Small Business Commissioner was helping to tackle the problem of late payment, while 55% of respondents saying they were not aware that the position even existed.

Ed Molyneux, CEO and co-founder of FreeAgent, said: “With the UK economy reeling from the Covid-19 pandemic and many businesses looking nervously ahead at a potential ‘no-deal’ end to the Brexit transition period, it’s easy to overlook the other challenges facing our small business sector.

“However, it’s vital that we do not brush the issue of late payments to one side. Failure to be paid on time remains one of the most widespread and devastating problems for freelancers and small businesses, and very little has been done so far to address the issue.

“Our data shows that around half of the invoices sent by small businesses in the UK get paid late, and there are certain areas where the issue is considerably worse. Some of these late payments go way beyond a week or two, with some invoices taking months to settle or even not being paid at all.

“Small 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. In our current volatile economic climate it is more important than ever for these people to be protected and supported, which is why we urge the government to introduce new legislation and significant penalties to help tackle the scourge of late payment once and for all.”

ENDS

Notes to editors

FreeAgent’s research analysed over 2 million sample data involving invoices sent by UK small businesses across its 100,000 customer base during the period from 1st January 2019 to 30th June 2020.

Late payment regional breakdown - sorted by % of invoices paid late

Liverpool 66%

Sheffield 63%

London EC (Eastern Central ) 62%

London W (Western & Paddington) 61%

Guildford 60%

Bristol 60%

Preston 60%

Peterborough 59%

Nottingham 58%

Stoke-on-Trent 58%

Gloucester 58%

Hull 56%

London SE (South East) 56%

Doncaster 56%

Belfast 56%

Shrewsbury 56%

London WC (Western Central) 56%

Warrington 56%

Dartford 55%

Harrow 55%

Stockport 54%

Bournemouth 54%

Twickenham 53%

Cardiff 53%

Southend-on-Sea 53%

Chester 53%

Milton Keynes 53%

London NW (North West) 52%

Llandudno 52%

Exeter 52%

Luton 52%

Bromley 51%

Birmingham 51%

Hemel Hempstead 51%

Southampton 51%

Edinburgh 50%

Redhill 50%

Bradford 50%

London SW (South West) 50%

Croydon 50%

Stevenage 50%

Leicester 49%

East Somerset (BA) 49%

Aberdeen 49%

Glasgow 49%

Norwich 48%

Northampton 48%

Worcester 48%

Brighton 48%

Cambridge 48%

Chelmsford 48%

Kingston-upon-Thames 47%

London N (North) 47%

Coventry & Warwickshire 47%

Rochester 47%

Swansea 47%

UK AVERAGE 46%

Portsmouth 46%

Reading 46%

Tunbridge Wells 46%

Watford 46%

Slough 46%

Sutton 45%

Newport 45%

Truro 44%

Colchester 43%

Walsall 43%

Lancaster 43%

Swindon 43%

Salisbury 42%

Newcastle-upon-Tyne 42%

Canterbury 41%

St Albans 41%

Plymouth 41%

Enfield 39%

London E (East) 39%

Derby 38%

Wakefield 38%

Oxford 38%

Taunton 35%

Leeds 32%

Yorkshire 25%

Manchester 10%

Ipswich 7%

About FreeAgent

Born out of the frustration that doing the books is just too damn hard for most of us, our award-winning accounting software is loved by over 100,000 small businesses and their accountants and bookkeepers.

For any press or media enquiries please contact:

Adrian Mather

PR & Media Manager

0131 447 0011
adrian@freeagent.com
press@freeagent.com