MORE than a quarter of all invoices are being paid late, according to new statistics, leaving small businesses struggling for cash.

The average reported time to pay was 38.97 days with just over half (51.71%) paid within 30 days. A third (33.02%) were paid between 31 and 60 days, and 15.25% were paid later than 60 days. The most troubling statistic, however, is that more than a quarter (27.26%) were paid beyond the agreed terms.

The figures, produced for the Chartered Institute of Credit Management (CICM) by Graydon, the credit information and data intelligence business, stem from the new Payment Practices Reporting Regulations that oblige larger firms with a ‘Duty to Report’ their payment performance. The first tranche, which includes names like Stagecoach, Center Parcs and The Carphone Warehouse, had to report by November 2017.

Philip King, chief exec of the CICM, says a snapshot of these firms reveals some alarming trends: “The biggest issue for many SMEs is not the length of payment terms but the certainty that payment will arrive when they expect it. Often, payment of a large supplier, the rent, or the wages are dependent on a large invoice being paid.

“If more than a quarter of invoices are being paid late then the suppliers are seeing a hole in their cashflow which is worrying, at best, and can be catastrophic. For many small businesses, it’s about more than just the balance sitting in the current account.”

Mr King warns, however, that the figures do not always tell the story: “One company, for example, reports that zero invoices are paid late – which must be a good sign – yet the average time to pay is 69 days, and only 7% of invoices are paid within 30 days, which is far less encouraging. Its maximum contractual payment terms are 75 days.

“Contrast that figure with another company that reports paying 57% of invoices outside the agreed terms, yet 52% within 30 days, 28% between 31 & 60, and 20% over 60 days. Its average time to pay is 56 days. Which company is the better bet? How you interpret that dependent on your point of view.”