Stretched SMEs owed an average of £21k in late payments

London, UK - 19 July 2021

The first edition of the Intuit QuickBooks Late Payments Bulletin¹ – a snapshot of the late payments issues faced by small and medium-sized businesses (SMBs) in the UK today – reveals that on average, SMBs with at least one overdue invoice were owed £21,373 in late payments in May. This figure represents more than two thirds (67%) of the average SMB’s typical monthly turnover². 

Almost nine in 10 SMBs (87%) had an overdue invoice in May, and with the pandemic amplifying cash flow problems, the average amount owed to SMBs has risen by more than £3,500 in the past three months (£17,777 – February 2021) and more than £4,500 annually (£16,840 – May 2020).

QuickBooks’ data suggests that on average, SMBs experiencing late payments aren’t paid for more than a week (7.7 days) after their invoices are due. Typically, SMBs require instant payment (64%) although a third (31%) offer invoice terms between 1 and 15 days, and 5% offer invoice terms between 16 and 30 days.

The findings also indicate that micro-businesses are worst affected by late payments. Among SMBs with an annual turnover of £1k - £19k, 39% of the invoices due in May were still overdue at the time of reporting³, compared to 34% for SMBs with a turnover of more than £1 million. 

Table 1: % invoiced amount overdue, and average amount owed, by SMB turnover

Chris Evans, VP and UK Country Manager at Intuit QuickBooks, comments: “Late payments have long been a burden for the small business community, and COVID-19 has only heightened this problem. With other businesses increasingly withholding or freezing payments to protect their own finances, overdue payments can cause serious cash flow problems, particularly as small businesses typically don’t have large cash reserves to fund expenses or bills. Even a delay of just a few days could be the difference in their bank balance tipping into the red. 

While it’s impossible to force an invoice to be paid on time, there are things small businesses can do to make the process more efficient. Financial management software issues automatic invoice reminders, meaning business owners don’t need to keep track of overdue invoices themselves. These reminders also often offer the ability for the recipient business to settle an invoice within just a few clicks, making the process easier and more likely to be completed quickly.”

Sources

¹Based on anonymised aggregate data from Intuit QuickBooks’s entire UK customer base. 

²For SMBs in the private sector only. Government business population statistics state there are 5,972,685 private sector SMEs (0-249 employees) in the UK, with an average turnover of £2.3 trillion (£2,270,229,000,000). The average annual turnover is therefore £380,101.91. Dividing this by 12 gives the average monthly turnover of £31,675.16. 

³Time of reporting for this data point was 16th June 2021.

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