IT companies waiting an additional 23 days to be paid for completed work.
Fintech business lender MarketFinance examined over 8,000 invoices1 from IT companies in the UK to reveal stark trends leaving businesses struggling with cash flow.
The analysis suggests that businesses typically agree 45-day payment terms from completion of work or delivery of goods. Despite this, 40% of invoices issued in 2019 were paid late, an increase from 36% in 2018. Strikingly, the number of days an invoice was paid late almost doubled in 2019 to 23 days from 13 days late in 2018. Invoices paid late were typically larger in value (£30,838) than those paid on time (£20,868).
Late payment trends have steadily improved over the years for IT businesses but 2019 signalled a shift where more invoices were being paid late and taking longer to settle.
Bilal Mahmood External Relations Director at MarketFinance, commented: “SMEs owners have come to expect long payment terms but late payments are inexcusable. For every day an invoice is late, it’s more time spent chasing payment. This means less time for business owners to focus on growing their business, coming up with innovative ideas and hiring more people, or just paying their staff and bills. Things need to change quickly.”