Despite recent reports showing that late payment amongst the UK business sector is improving, a new set of data has shown that there could be another chapter in the story. Commercial debt recovery firm Lovetts Plc have recently released a report that shows in fact many businesses have eased off pressure on debtors giving more leeway in payment time.
In contrast to the first quarter of 2012, businesses have reduced pressure on their paying debtors for some reason, and are now allowing an extra 16 days before a Letter Before Action (LBA), or legal threat, is used. It’s unclear whether this is by accident or on purpose, but either way it adds up to less pressure on debtors than this time last year.
On average, the time from invoice to LBA has increased in the time between Q1 2012 and 2013. In 2012, businesses waited on average 76 days, whereas in 2013 it was 93 days. Given that the majority of businesses work on payment terms of 30 or 60 days, that means they’re waiting at the very least 33 days before taking action. However, once an LBA has been issued, businesses are taking less time to proceed with legal action – this has fallen by 4 days to 20 days since Q1 of 2012.
If your business is suffering from late payment issues, then there are many steps you can take before it comes to legal action. Invoice finance is an increasingly popular way to unlock the cash tied up in your unpaid invoices, helping to enrich your cash flow and help with day to day expenses. Whatever the actual picture, late payment has long been a problem for the UK’s small businesses, so this is one issue that it’s worth dealing with.