Late payment to small businesses

Late Payments in the UK

More than three-quarters of small businesses in the UK have been affected by long payment terms or “late payments” of commercial debts in 2010-2011. The Department for Business published in July 2011 alarming figures: 4,000 UK businesses failed in 2008 as a direct consequence of late payment.

A recent article in the Daily Telegraph reported that small and medium sized businesses had a total of £35.3 billion worth of debt owed to them, with the majority of the culprits being large corporates.

• On average remittance terms have revealed that the length of time they wait is on average 39 days beyond payment terms
• Analysis shows they are being forced to spend an average of half a day every week pursuing payments
• More than half of the firms spending one to six hours per week chasing late payments, tardy clients are exhausting the SMEs’ already-stretched resources

“In the current economic climate, every penny counts and for small businesses a late invoice can mean not being able to pay their staff”, National Chairman of the FSB, John Walker, said. Late payments have been estimated to cost UK businesses £180 billion in debt interest charges in 2008. They also dampen young businesses’ growth and restrict productivity.

MarketInvoice’s late payments solution

MarketInvoice is very different to the main alternative, which is factoring. Our three main advantages are flexibility, cost and scope. In terms of flexibility, using MarketInvoice you sell the invoices that you want, when you want. Unlike traditional invoice discounting, there is no obligation to discount your entire debtor ledger, and no lengthy lock-in periods.

• MarketInvoice puts you back in control of your cash flow
• It is lower cost, because by only selling selected invoices you avoid expensive arrangement fees and monthly service charges

By building up a track record of successful invoice trades in the marketplace you drive down your cost of funding as investor buyers compete more keenly for your business.

• Click here to see a list of the numerous debtors/corporates/customers that MarketInvoice has helped auction invoices from
• Click here for MarketInvoice’s 5 tips for avoiding late payment
• Click here to read our co-founder Anil Stocker’s response to late payments.

Why are late payments an issue for SMEs?

Large corporations, fully aware of the power they wield over their small and medium sized business supply chain, often enforce 90-120 day payment terms. At Marketinvoice, we have trading statistics that show FTSE 250 companies (high street and household names) paying these businesses as late as 30 days after officially signed terms.

• Small businesses are afraid of chasing payment of commercial debts for fear of damaging their professional relationships with blue-chip debtors are forced to endure the long delays between issuing invoice and payment.
• Small and medium-sized businesses are trapped in a “double credit crunch”, thanks in large to late payment
• On one side they are waiting long periods for payment and on the other are also experiencing severe cutbacks in bank overdrafts
• A lack of overdraft facility leaves small business owners without short-term financing options to counter late payment
• Businesses now often have to resort to accepting contracts that are inflexible and costly to them

Entrepreneurs are forced to pledge their personal assets as guarantees, turning potential business failures into personal bankruptcies. Those who can’t access finance risk disappearing altogether.

Debtors that MarketInvoice has helped with

MarketInvoice has helped with numerous debtors/corporates/customers, including: