Settle up. Shining a light on the late payment scandal
Small businesses are the heroes of our economy. Yet they are not well defended when it comes to late payments, which cost UK businesses an estimated £1.6 billion in 2023.*
The problem is politely called ‘late payment’ which makes it sound like a legitimate business practice. But it’s not. Late payments can drown small businesses. Late payers are holding on to other people’s money without permission, so we see this instead as unapproved debt.
Often, late payments mean owners have to use their own savings to pay staff wages or to cover business costs. And it takes a toll on their mental health.
So what does the public think about this? In our latest report, Settle up. Shining a light on the late payments scandal, we asked them. Almost half (48%) say late payments make them angry. They’re shocked by the scale of it. Two-thirds (70%) see paying bills late as a form of theft or bullying.
Bad payments are bad business
More than two-thirds of the public (72%) say they would prefer not to buy from companies that don’t pay their bills on time. That’s why we believe it should be easier for the public to see how quickly big firms pay their suppliers.
Just as no good employer would dream of paying its employees late, the public expect businesses to pay their suppliers on time. Four out of five (82%) say companies should always pay their debts on time, whether it’s to their staff or to their small business suppliers.
On the positive side, more than two-thirds (70%) say they’d be more likely to buy from businesses that pay their suppliers properly. So businesses that pay on time could do well by talking about their commitment to their small business suppliers.
No excuses for the scandal to continue
Four out of five people (80%) say there’s no excuse for big businesses to pay late as technology makes it easy to pay bills when they’re due – in an age where consumers can walk into a store and pay for something instantaneously with a watch or a phone through contactless. People hold big businesses most responsible for the late payment crisis. Three out of five (62%) say large firms should tackle the problem. But people expect the government to act too, with the same proportion (62%) saying fixing the problem should be a priority. That’s why we hope to see new legislation implemented by them, as they pledged in their manifesto.
The late payment scandal has been around for too long. We’ve previously set out how to address the problem. And now there’s a great opportunity to tackle it.
*The cost of late payments to small businesses has been estimated as the time value of the outstanding invoice value of all small and medium businesses in the UK. This calculation is based on businesses with less than 50 employees for the UK. This is calculated by applying current interest rates (for small and medium sized businesses) to aggregate small and medium business sales for the period equal to the average days late invoices paid.
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Source: Xero Blog
