On average, sole traders and small businesses expect to receive the payment that they are due 15 days after completing work, new research has revealed.

Tide commissioned YouGov to survey small business decision makers, including sole traders, to discover their payment terms, how often they experience late payments, and the actual duration before invoices were settled.

Tide calculated that the average payment term was 15 days. However, approximately 1 in every 6 (16%) invoices are paid late. Tide calculated that when late payment occurred, this added, on average, another 15 days, bringing the total up to 30 days.

89% of those surveyed have some form of payment terms in place, and the remaining 11% do not have one of the payment terms shown to respondents or are not sure. Nearly one third (30%) have payment terms of 30 days after completion, and more than a third (36%) are waiting 30+ days after completion. 17% are securing at least some payment ahead of beginning work. A lucky third (33%) never experience late payments.

When it comes to industries, retail is the top performer with just 11% of invoices paid late. IT & telecoms and construction professions experience more than 20% late payments – or 1 in 5. At the most extreme, small businesses operating in the IT & telecoms sector have average payment terms of 36* days, with payments arriving, on average, 12* days late.

Sarah Young, VP of Member Engagement at Tide, said “Late payments are a blight on businesses, and the problem often becomes a cascade of extended credit. Perhaps the biggest takeaway from this research is that giving generous credit terms does not improve your credit control. In fact, it mostly has an inverse relationship; the longer your credit period, the bigger the payment delays, and the longer you wait to get paid.”

“It’s not always easy to change your credit terms, but you can certainly reassess what you’re doing and consider if it is good for your business and good for your customers. You may not be able to change all your credit agreements overnight, but you can certainly make gradual changes to improve your cashflow and the security of your business.”

“With Tide, business owners can register a limited company and open a business account, all in one go, for free. It only takes minutes to apply, and you can have your certificate of incorporation within hours*. We even pay the £12 incorporation fee on your behalf.”

RANK

INDUSTRY

AVERAGE STANDARD PAYMENT TERMS (DAYS)

AVERAGE LATE PAYMENT DURATION (DAYS)

ACTUAL* AVERAGE DURATION UNTIL INVOICE PAYMENT (DAYS)

AVERAGE PERCENTAGE OF INVOICES PAID LATE (%)

1

Retail

7.67

4.27

11.94

11.06

2

Construction

14.03

12.42

26.45

22.69

3

Finance and Accounting

16.53

11.22

27.75

17.80

4

Other

18.90

9.49

28.39

14.40

5

Media/ marketing/ advertising/ PR & sales

21.97

12.04

34.01

19.23

6

Manufacturing

22.51

12.36

34.87

19.81

7

IT & telecoms

23.31

12.25

35.56

20.23

Ordered by rank for actual* payment terms (average payment terms + average late time):