By Daniel Hunter
The smallest businesses are now waiting longer than ever for their invoices to be paid, says the Asset Based Finance Association, the body representing the asset based finance industry in the UK and the Republic of Ireland.
According to the ABFA, UK businesses with turnovers of under £1 million are now waiting an average of 72 days for payment of invoices — a day more than a year ago — despite the strengthening economic recovery.
By contrast, businesses with £500m+ turnovers have seen payment waits fall by a day since last year to 47 days.
The ABFA says that the smallest businesses are now waiting an average of 11 days longer for payment than they were even at the peak of the recession. The ABFA’s research shows that in 2009, businesses with turnovers of under £1million had to wait an average of 61 days for payment of invoices.
The ABFA says that it is disappointing to see waits for payment that rose sharply during the recession fail to return to pre-crisis levels as the economy recovers.
Jeff Longhurst, Chief Executive of the ABFA, said: “Despite the economic recovery gathering pace, payment delays are getting worse, not better, for small businesses.”
“It’s very worrying to see that the trend is going in the wrong direction for smaller businesses, in spite of what is a more benign business climate than we have seen for several years. The benefits of the recovery are not being felt equally.”
“Delays to payments put enormous pressure on small businesses’ cash flow — they have to meet overheads, tax bills and their own supplier invoices whether they’ve been paid or not. Smaller businesses are particularly vulnerable. No matter how successful they are, if just a few invoices aren’t paid on time, they could end up in serious financial trouble.”