Small businesses in Northern Ireland continue to be plagued by the problem of late payment, a new study shows.
For research by cloud accounting software company FreeAgent has found that nearly two thirds (62.4%) of all invoices sent by local SMEs in the past year being paid late.
That’s up from 55% the previous year, and sees the region worst impacted that the rest of the UK, where Wales (48%) has the lowest rates of late payment, followed by Scotland (48.5%) and then England (49.3%).
Belfast is the city worst affected by the late payments crisis, seeing 62.4% of invoices sent during the past year paid late. It also ranks within the top five worst cities across the UK for late payments.
At 49.3%, the UK’s average late payment rate is now higher than it was during the same period the previous year (43% in 2022-2023).
It is also higher than it was during the 2020 calendar year (46%), which suggests that the issue is becoming a more prevalent problem across the devolved nations for small business owners in the post-Covid and cost-of-living crisis era.
Roan Lavery, co-founder and chief executive of FreeAgent, said: “Maintaining a healthy cash flow is the number one priority for anyone running a business. But the vast majority of SMEs simply don’t have the luxury of being able to absorb late payments into their accounts - they need to get paid promptly to keep themselves afloat.
“It’s therefore concerning to see the level of late payment in Northern Ireland increasing in recent years. This isn’t just a case of payments coming a few days or weeks late, as some of these invoices take months to settle up or - in some cases - won’t be paid at all.
Looking across the country’s five million-strong small business sector, it’s clear to see just how big of a concern this is for the UK.
“Our economy remains in a fragile state, with many small businesses still feeling the impact of major disruption caused by the Covid-19 pandemic and the cost-of-living crisis, so it’s more important than ever to ensure that SMEs are protected and supported.
“I hope the new Labour government will commit to bringing in new legislation or putting more resources into the Small Business Commissioner’s remit, so that the chronic issue of late payment can be properly tackled.”
A separate survey of small business owners by FreeAgent has also revealed how SMEs feel about the issue of late payment. Around a quarter (24.6%) of respondents said they had, at some point, felt the future of their business was in jeopardy because they were not getting paid on time.
The survey also revealed that more than half (55.4%) of respondents felt the Small Business Commissioner should have greater powers to tackle the late payment problem, while 46.1% believed that the Prompt Payment Code (PPC) should be made mandatory for all businesses to follow.
