Recent statistics show that 62 per cent of invoices for subcontractors in the UK are not settled until past due date. This is according to MarktInvoice business lender. The report spent 5 years tracking 30,000 invoices across 80 countries. One in five invoices sent by SME’s in the UK remain unsettled until two weeks after due date.
Irish firms have a good paying track record; according to the research Irish firms pay bang on time! Other firms in the rest of Europe are actually improving their payment time to UK subcontractors while payment between UK companies is taking ever longer.
In some countries main contractors pay subcontractors before due date, with Belgium as an example, paying an average of 4.1 days early. Countries paying before due date include:
Japan, Belgium, Netherlands, Switzerland, Germany and Ireland. Countries with the habit of paying late include Denmark (1.2 days late) China, Finland (3.4 days late), UK (5.85) days late, France, USA, Canada, Poland, Israel, UAE, South Africa, Mexico and Australia (25.4 days late!).
Late payment is a major problem for subcontractors. Contractors who disregard subcontractors do the economy a great disservice. Subcontractors find cashflow being squeezed. With bad liquidity it is difficult to compete for new contracts or to hire new staff. It is difficult to run a business when there is financial stress. In the UK there is not enough protection for long term payments.
While there is a problem for subcontractors in the SME category being paid by main contractors, there is an even bigger problem when SME owners pay other small businesses. The average is 15.9 days overdue in this category. Those SME’s trying to do the right thing by paying early risk jeopardising their working capital.
If you are a subcontractor in the building industry, or trenching for fibre optics, allow us to talk to you about our Commercials Package for Subcontractors. We take the burden of financials off your shoulders so that you can concentrate on your core business. Contact QStimate.