New Research Highlights Regional Late Payment Risk for Small Businesses

Late Payment - by UK area

New analysis of data from over 3 million SMEs up and down the country has revealed the areas of the UK where late payment is at its worst.

121 areas of the UK were scored and ranked based on how quickly businesses pay their invoices, highlighting which regions are the highest and lowest risk for freelancers and small businesses when it comes to getting paid on time.

According to the Federation of Small Businesses, 58% of their members are owed up to £10,000 in late payments from their clients. 15% are owed between £10,000 and £20,000, and an incredible 27% are owed over £20,000 from their late paying clients.

Solna, the smart invoicing platform, which undertook the new research on late payments, scored businesses from 1 to 5, based on their creditworthiness and ability to pay invoices on time.

Businesses scoring 5 have the best credit rating and consistently pay on time, businesses scoring 1 have lower credit ratings and regularly pay late.

All scores were ranked to reveal the lowest and highest risk areas in the UK for late payments.

Late Payments: Lowest risk areas in the UK

  1. Lerwick
  2. Aberdeen
  3. Kirkwall
  4. Hemel Hempstead
  5. Redhill
  6. Outer Hebrides

Late Payments: Highest risk areas in the UK

  1. West Central London
  2. Bolton
  3. East Central London
  4. Oldham
  5. Luton
  6. Birmingham

Remote Scottish islands home to most reliable payers

Some of the most northerly parts of Scotland come out on top, dominating the top 4 low risk positions.

Interestingly, the best freelance and business clients might be found off the mainland. Remote Scottish islands, including Orkney, the Outer Hebrides, and Shetland, are the most reliable for fast payments.

Late payment common across central London, the North, and the Midlands

Areas of central London, Greater Manchester, and the Midlands made the list of least reliable areas. These towns and cities tend to be more densely populated with startups and SMEs, meaning more competition, more costly overheads, and possibly more reasons to delay payments to protect cash flow.

“The reasons why people in more rural areas have better scores than businesses based in London and other urban areas is a combination of cultural, geographical, and economic factors.” says Solna’s CEO and co-founder, Inna Kaushan.

“Businesses in a smaller community are more likely to pay their suppliers on time because it is often the case that they know them. In a smaller community getting a reputation for being unreliable could be really damaging to their business.”

For small businesses and sole traders in the highest risk locations, dealing with late payers can be time-consuming and frustrating. Late payments can damage their cash flow and prevent growth, making it harder to win new business, and pay for essential resources.

Not only can it be stressful for small business owners as they worry about paying their own suppliers, they also might be forced to let staff go, or even close their business for good.

The knock-on effect

For Inna Kaushan, the knock-on effect of late invoices is a concern. “When a business delays payment because of cash flow issues, they create cash flow issues for their suppliers too. Those suppliers might then delay paying their own invoices, and on and on it goes.”

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