Late payments worsen for businesses

Data from small business accounting platform Xero has indicated that late payment days are worsening. The research found that the average time it takes to get paid rose by 0.6, to 30.5 days in January, the longest payment time recorded since September 2020.

In January, payments to UK small businesses were also late by an average of 8.4 days, a significant rise of 1.8 days since December 2022, and the highest level since August 2020.

Alex von Schirmeister, UK Managing Director, Xero, said “It’s unacceptable that payment times to small businesses continue to rise.”

“The outcome of the UK government’s late payments consultation cannot come soon enough – small businesses are critical to our economy and communities, but can’t drive UK growth without stricter policies to protect them.”

Separately, the data showed business sales revenue in January rose 5.1 percent year on year (y/y), after a difficult Christmas trading period, with just a 2.7 percent rise in December. Hospitality (+9.2 percent y/y) and construction (+9.7 percent y/y) saw large positive sales growth in January.

When taking the impact of inflation into account using the CPIH in December (9.2 percent y/y) and January (8.8 percent y/y) as a proxy for price rises, sales volumes fell 6.5 percent y/y in December and 3.7 percent y/y in January.