The government’s social distancing restrictions have had a devasting effect on many businesses. One area that has hit them particularly hard since the lockdown is the rise in late invoice payments.
Data from Sidetrade’s unpaid invoice tracker highlights the extent of the problem across Europe. Information from the UK shows that there has been an increase of almost a quarter in the number of B2B invoices going unpaid since the start of the lockdown.
Rise in late payments
Sidetrade is a B2B artificial intelligence platform and monitors the payment behaviour of more than 3.7 million businesses every week. They analyse 26 million invoices from six European countries, which account for €54billion worth of financial B2B transactions.
The latest data shows just how much of a financial impact the coronavirus restrictions are having on businesses. From 1st January to 11th March 2020, around 20% of invoices were paid late. The tracker counts those invoices that are more than 10 days overdue as late.
By 11th April, the number of late paid invoices increased dramatically across all the countries monitored. In the UK, the figure rose by 23% and this is expected to get worse as more companies start to feel the financial effects of the lockdown.
The situation is considerably worse in the other countries monitored by the tracker. Italy has seen an 80% rise in unpaid invoices, with France up by 56% and Spain by 52%. Late payments in Belgium have increased by 44% and by 26% in the Netherlands.
The financial effects of the coronavirus lockdown
Even before the COVID-19 pandemic started to take hold, many businesses in the UK were struggling financially. Late payments have always been a problem, especially in particular sectors. Many are even facing insolvency proceedings due to the impact of late payments and the social distancing restrictions have only added to this.
Research from the Federation of Small Businesses showed that late payments caused around 50,000 companies a year to go out of business. This costs the UK economy £2.5 billion.
Data released earlier in the year from Pay.uk, highlighted that late payments almost doubled last year and now stand at £23.4 billion.
Restaurant and pub insolvencies
One area of the economy which was already suffering before the pandemic is the leisure and hospitality sector. During 2019, there was a 10% increase in the number of pub and restaurant businesses entering insolvency.
This industry has been one of the hardest hit by the lockdown restrictions and many big name chains have already announced plans to close sites. This includes Carluccio’s, which has appointed administrators, and The Restaurant Group has said that the majority of their Chiquito sites won’t reopen after the lockdown.
Reduce the impact of coronavirus on your business
With many companies only having around three months cashflow available to them, there will be some who will struggle to come through the coronavirus crisis. However, there are ways you can try and limit the financial damage caused.
It’s essential that you keep a close eye on your cash flow and ensure that you apply for all the relevant government grants and loans that are available. If you provide credit facilities to customers, don’t let these accounts get out of control and watch out for customers who are starting to pay late. Even those who have always paid on time can get into financial trouble and it doesn’t matter how big they are.
If you’re struggling to handle your debtors and late payments, at CEA Ltd we can work with you to recover the money you’re owed. Our team are still working and can discuss payment options with your customers and come to a quick and successful conclusion.
To discuss your debt recovery requirements, contact our team today by calling 0113 532 8350 or email office@cealimited.co.uk.
More information
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