Fintech firm FreeAgent calls for action tackling late payments to small firms

Only half of all invoices sent by Scottish freelancers and small businesses in the past 18 months were paid on time, reinforcing the need to tackle the serious issue of late payment, a report out today says.
Ed Molyneux, chief executive and co-founder of FreeAgent. Picture: DN Anderson.Ed Molyneux, chief executive and co-founder of FreeAgent. Picture: DN Anderson.
Ed Molyneux, chief executive and co-founder of FreeAgent. Picture: DN Anderson.

Edinburgh-based cloud accounting software company FreeAgent has analysed more than 2 million invoices sent by its customers between January 2019 and June of this year. It found that 54 per cent of those sent over this period were paid on time, falling to 52 per cent north of the Border.

Additionally, the total number of invoices paid to small businesses over the April to June 2020 lockdown period compared to previous quarters has plummeted by a third. Furthermore, the sector experienced a slight increase in late payment over the same period, with just 51 per cent of invoices paid on time.

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The tech firm also conducted a separate survey of more than 1,200 UK small business owners, with just 6 per cent of respondents saying they thought elected officials were taking late payment for small firms seriously.

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The Big Interview: FreeAgent chief executive Ed Molyneux

Ed Molyneux, chief executive and co-founder of FreeAgent, said: “With the UK economy reeling from the Covid-19 pandemic and many businesses looking nervously ahead at a potential ‘no-deal’ end to the Brexit transition period, it’s easy to overlook the other challenges facing our small business sector.

“However, it’s vital that we do not brush the issue of late payments to one side. Failure to be paid on time remains one of the most widespread and devastating problems for freelancers and small businesses, and very little has been done so far to address the issue.

“Some of these late payments go way beyond a week or two, with some invoices taking months to settle or even not being paid at all.

“Small business owners don’t have the luxury of being able to absorb late payments into their accounts - they need to get paid promptly to keep their cash flow healthy. In our current volatile economic climate it is more important than ever for these people to be protected and supported, which is why we urge the government to introduce new legislation and significant penalties to help tackle the scourge of late payment once and for all.”

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