Data published by Xero has revealed that late payments are costing UK small businesses £684 million each year.
On average, UK small firms are paid 5.8 days late, Xero found. It revealed that seasons affect cash flow: 43% of UK businesses experience negative cash flow in the winter months compared to 39% in the summer months.
The data also showed that nine in ten small businesses experience at least one month of negative cash flow each year. The average small business experienced 4.5 months of negative cash flow in 2021.
Commenting on the data, Alex von Schirmeister, Managing Director at Xero UK, said: ‘Small businesses continue to show huge resilience in the face of soaring costs but our data consistently points to the damage caused by late payments.
‘This isn’t ‘late payment’, it’s ‘unapproved debt’. It’s time to call it that and tackle it head-on. This includes enforcing stricter penalties for the worst offenders, to provide a lifeline to an overlooked majority.’