New data has revealed that more than 1000 businesses went bust in 2018 while they waited to be paid by clients or customers. This startling data from Begbie Traynor highlights the importance of debt recovery to the success of small business and the massive problem of late payment in the UK.
The data looked at the number of days that businesses waited for payment and showed that 115,000 firms waited on average 57 days to be paid. For more than 1000 firms, this wait was too long and triggered the insolvency process. The data was collected from over a million debtor day reports dating back to 2011. Of the businesses that became insolvent, 34% waited longer than 57 days for payment, and 15% waited more than a massive 86 days for payment.
The support service sector is the most likely to face difficulty with late payments, and in the last year more than 35,000 support service sector businesses reported debtor days, and 260 collapsed reporting an average of 25 debtor days.
The construction industry was not far behind, racking up 12,000 debtor days, 146 insolvencies and an average 61-day wait for payment.
This data comes at the same time as that presented by Intuit QuickBooks, as a result of the global research project “The State of Small Business Cash Flow”. QuickBooks revealed some starting statistics uncovered in the UK and draws further attention to the cash flow challenges faced by businesses. The research carried out by QuickBooks found that small businesses in the UK carry on average £31,055 in debts owed to them and that 71% of small business owners have had trouble sleeping as a result of cash flow concerns.
Late payments are not only a problem for the survival of businesses but also productivity and growth. The Business Select Committee outlined that late payments were significantly holding back SMEs in terms of productivity, and that evidence of payment terms getting longer was mounting.
Small Business Commissioner, Paul Uppal stated that addressing late payment culture in the North East alone could boost the economy of the region by up to £100m a year.
If you are facing late payment issues, Yuill + Kyle can help. We offer efficient and effective debt recovery services to businesses across a wide range of sectors. Get in touch today.
If you need advice or assistance with debt recovery, contact our team of experienced solicitors today. We offer an efficient and cost-effective service to help get you back on track. You can call us today on 0141 331 2332 or complete our online enquiry form, and we will get back to you right away.
We look forward to helping your business thrive.
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