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Late Payment of Invoices is Growing Problem for UK Businesses

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According to a recent study undertaken by BDRC Continental on behalf of R3 - the UK's insolvency trade body – since January 2015, businesses across the nation have had to deal with approximately 16 per cent of their issued invoices being paid late, while 50 per cent of UK-based enterprises have had invoices paid late over the same period.

This trend is concerning signed a separate R3 study showed that late payment is a major contributory factor when it comes to the number of corporate insolvencies.

Commenting, Andrew Tate, who is the Vice-President of R3, recently stated:

"Late payment puts unnecessary strain on a business' cash flow, increasing the risk of insolvency. Despite government guidelines and business campaigns, late payment still remains all too common. Businesses know how much it costs others to chase down debts, and feel they can still get away with it."

"When a business enters insolvency, customers can see this as an opportunity to further delay payments or avoid payment altogether. Doubts over cash flow caused by late payment can make it impossible to continue to trade a business in administration until a buyer is found."

"A year ago, the FSB found half of its members had been paid late in the previous year. Although the government is keen to make an impact on late payment, progress has been disappointingly slow over 2014 and 2015 with the number of businesses affected by late payment stubbornly high."

Similarly, speaking on behalf of Federation of Small Businesses (FSB), John Allan, who is the Federation's National Chairman, said:

"The weight of evidence showing the damage poor payment practices are having on the UK economy grows greater each day with the amount owed in late payments now at £41.5 billion. Once again we find it is sole traders and smaller firms, which are facing the brunt of late payments, and this is putting viable businesses at risk of closure.

"Addressing the UK's poor payment culture -- particularly among large companies towards their smaller suppliers -- must be a top priority for the new government. Small businesses see progress on payment practices as a key benchmark of success for the new administration."

Interestingly, R3's research also shows that the problem of late paid invoices is most prevalent amongst UK Sole traders, with approximately 7 per cent of said traders indicating that 41-50 per cent of their invoices had been paid late in the last six months.

Further commenting on the issue with a particular focus on Sole Traders, R3's Mr Tate said:

"It's the smallest companies that bear the brunt of late payment. The consequences of late payments are magnified for smaller companies too: one invoice being paid late will have a disproportionate impact on a very small company compared to a larger counterpart."

Contact Us – Debt Recovery and Late Payment Problems Help for UK Businesses

At Advantage Litigation we work in partnership with our clients to ensure that we understand and meet their expectations. Our team of highly experienced debt recovery solicitors understand how securing funds that are owed can detract from a business's success. We are very familiar with the law in this area and will be able to handle every aspect of the process for you. We will also discuss the various finance options available and help you find a way of funding that best reflects your needs. Click here to contact us today or call 0800 160 1298.

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