UK SMEs report rise in late payments

The number of late payments to small businesses in the UK has surged over the past three months, a new analysis has found.

According to the latest Xero Small Business Insights data, payouts to small businesses were made 7.3 days late, on average, between April and June of this year.

This represents an increase of 1.8 days compared to the previous quarter. Xero also noted that it was the largest quarterly increase since the start of the pandemic.

The steepest increases in late payments were seen in the retail trade and hospitality, Xero found.

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Xero noted that with inflation rising by 2.8 per cent in the year to June 2024, small businesses are “still selling fewer goods and services than they did a year ago, forcing them to navigate tricky and uncertain economic conditions.”

The software company added that “the challenging economic environment that small businesses nationwide are facing, without having to chase down ‘unapproved debt’.”

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“To wait over a week for payment owed is an unacceptable and unsustainable financial model for small businesses,” said Kate Hayward, UK country manager at Xero.

“Our latest data once again highlights the challenging economic environment that small businesses nationwide are facing, without having to chase down ‘unapproved debt’ being hoarded by customers, placing immense strain on both cash flow and business owners’ livelihoods.”

Hayward called on the new Labour government to follow through on their promises to take a robust stance on late payments.

“We urge them to swiftly convert their commitments into action through introducing legislation as part of the Draft Audit Committee Bill,” Hayward added.

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