New research released today has highlighted the knowledge that invoices dated today are not likely to be paid until 2nd February 2018, 44 days longer than typical 30 day payment terms
Of the 96 sectors analysed, just one, employment agencies, paid their invoices within 30 days on average. Only 12 sectors managed to pay invoices in under 45 days including Education and Construction, while the rest took much longer at 74 days on average.
From the 129,000 invoices analysed, the worst performing sector is membership organisations including trade bodies and other subscription-based organisations. If your business works in this industry or sells goods or services to the worst performing sector, you should expect to wait on average more than 137 days – the equivalent of over 4 months for payment.
Chirag Shah, CEO of Nucleus Commercial Finance, who carried out the research, says, “With such a laissez faire attitude towards payment terms it’s no wonder small businesses are chasing invoices daily. I can empathise – it is a vicious cycle. Nucleus is a SME itself and sees the knock on effect that long payment has – even more long payments!
Most businesses rely on having healthy cash flow to grow, but many small businesses rely on it to just keep operations running day to day. We want to highlight the challenges business owners face, and make people aware that this is a cross-industry issue. We all need to take responsibility for payment terms to create a thriving eco-system of businesses.
This is not a finger pointing exercise. What we want to do is prepare businesses for the reality of the situation and tackling these payment lengths, whilst also raising awareness of the situation. Rather than talk about payment terms or late payment – a conversation that is already a recognised issue, let’s look at how long businesses are actually taking to pay each other so they can arm themselves with the facts and we can support them better, having understood these challenges and pressures on their cash flow.”
