Latest data from Money.co.uk reveals that UK businesses are experiencing payment delays averaging 47 days, highlighting a significant challenge for small businesses.
The Federation of Small Businesses (FSB) has called late payments one of the "biggest problems" facing SMEs. In response, the UK government has announced plans to introduce stricter regulations to tackle delayed payments, aiming to support smaller enterprises and boost economic growth.
The research, based on data from the Department for Business and Trade, outlines how late payments impact various industries across the UK.
Manufacturing industry hit hardest
Among all sectors, manufacturing businesses face the longest wait times, with payments typically received after 47 days. The delay is largely attributed to complex supply chains, where multi-tiered supplier relationships slow down transactions.
Other sectors affected
The wholesale and retail trade sector, including motor vehicle and motorcycle repair, ranks second with an average payment delay of 36 days. Businesses in this industry often operate on tight margins and rely on credit, meaning customers may delay payments while assessing product performance.
The agriculture, forestry, and fishing sectors also experience a 36-day delay due to their seasonal nature. Buyers often wait until they generate revenue from sold goods before paying suppliers, creating financial strain on producers.
Advice on managing late payments
Joe Phelan from Money.co.uk commented:
"While overdue invoices might feel like an inevitable part of running a business, there are ways to mitigate their impact. By adopting proactive measures and leveraging financial tools, SMEs can build resilience and protect their operations from the risks associated with late payments."
Industry payment delays (median days to receive payment)
|
|
|
|---|---|---|
1 | Manufacturing | 47 |
2 | Wholesale & Retail Trade (including vehicle repair) | 36 |
2 | Agriculture, Forestry & Fishing | 36 |
2 | Water Supply, Waste Management & Remediation | 36 |
5 | Accommodation & Food Services | 35 |
6 | Transportation & Storage | 34 |
7 | Construction | 33 |
8 | Mining & Quarrying | 32 |
9 | Professional, Scientific & Technical Activities | 31 |
10 | Arts, Entertainment & Recreation | 30 |
10 | Real Estate Activities | 30 |
10 | Information & Communication | 30 |
With late payments continuing to be a major hurdle for businesses, the government's proposed crackdown could offer much-needed relief to small enterprises struggling with cash flow.
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