According to a recent trade credit report from Credit Insurer Atradius, UK companies saw an increase in invoice collection last year (61%), up from 54% in 2018.
Despite the apparent improvement in invoice collection, it still remained that 35% of invoices produced by UK businesses were outstanding beyond payment terms. And the outlook appears to be that it is only going to get worse.
The report highlighted the fact that one third of businesses (32%) expect the trend to get worse. With over half (52%) expecting a large increase in cases where late payments occur.
In contrast, the data shows that in Western Europe only 36% of businesses expect the late payment culture to get worse.
Brexit and economic factors not helping
The data does not substantiate a feel-good factor, and industry experts are warning businesses to heed caution in 2020. With the uncertainty over Brexit continuing, credit control experts are warning that it may get worse before it gets better.
Rather grimly too, the outlook predicts that the UK will be the leader in insolvency rates, compared with the rest of Western Europe. With the UK showing a rise of 10% in 2019, and a prediction of a further 5% rise in 2020.
Late payments can cause huge problems for businesses
It’s also interesting to note from the report, that UK businesses are allowing less and less time for customers to pay their invoices, going from 24 days, to 20 days according to average payment terms. In comparison with the rest of Western Europe, this figure sits rather high at 34 average days to allow customers pay their invoices.
This narrowing of an invoice collection window across UK businesses is expected to be as a result of a worsening late payment culture, expected in the coming months. Thus further forcing cash-strapped company owners to collect ever quicker before delays can materialise.
Companies consider discounts to improve invoice collection
Rather interestingly, the report also notes that just under half of UK businesses surveyed (42%) would consider a discount on their invoices to ensure timely invoice collection.
If you need help with invoice collection, or are suffering from the inability to pay suppliers and would like to speak to someone about insolvency, we work closely with trusted Insolvency Practice partners who would be happy to discuss your situation in the best interest of both parties.