BusinessCompany NewsLate payment costs UK companies £20bn

Late payment costs UK companies £20bn

UK businesses could be losing up to £20bn every year in unpaid invoices, according to a report out today.

Intrum Justitia?s UK Payment Index estimates that almost half (47%) of UK invoices are overdue – on average 18 days late – and 1.9% of total revenues are never paid at all.

The credit management service provider said the results of the survey clearly illustrated that payment delays put British businesses at risk. The increasing debt-to-income ratios significantly reduced profitability for companies – particularly SMEs who are vulnerable to variations in cash flow and often rely on a limited number of customers, it said.

Compared with Europe, the UK ranked poorly for payment delays, according to the company. The average 18 day UK payment delay is two days longer than in Ireland or the EU.

The research also reveals that UK creditors believe that one of the principal reasons for late payment is a deliberate decision on the part of debtors to use them as a ?source of free finance?. Another key reason cited was ?debtors financial problems?.

?The consequence of payment delays on the public purse is also worrying – the UK government could be losing up to £10bn each year in lost VAT and corporation tax – the equivalent of the entire UK transport budget,? the report found.

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