UK Late Payment Culture - Invoice Finance Companies Lead By Example
UK invoice finance companies have been leading by example when it comes to the issue of UK late payment culture. There has been much in the press recently about late payments, and the UK Government's initiatives to tackle it. This has included the proposed appointment of a Small Business Commissioner to tackle the whole issue of late payment. According to Experian, the average number of days taken to pay UK invoices is now 60 days. Read our recent article about how wider use of invoice finance could help address UK late payment culture.
FundInvoice deal mainly with UK invoice finance companies and so we receive regular commission payments from them, in respect of clients that we successfully find an invoice finance facility. We analysed the time that the financiers take to pay and it clearly shows that they are leading by example.
Self Billing
In about 30% of cases the financiers are "self billing". This means that you don't even have to raise an invoice, they send you a self billing advice and the money is transferred to your bank account. On average those that undertake self billing took just 5 days to pay from the date of the advice, to the date that funds were received.
Payment Periods
Looking at the 70% of invoice finance companies that we send invoices for payment, the average number of days taken to receive funds, from the date of the invoice, was just 10 days.
Invoice Finance Companies
So on average, across both self billing and invoiced, the average time to pay was just 8 days. This clearly demonstrates that, on the issue of UK late payment culture, UK invoice finance companies are leading by example.
Bridging The Credit Gap
Whilst these credit terms are exceptionally short, compared to the UK average, even when customers pay either to terms or before due date there can still be a credit gap. This is the period between the supplier providing products/services, raising the invoice and getting paid. Invoice finance bridges this "funding gap" by providing the majority of the value of a sales invoice, immediately.
