Waiting for a payment to arrive is never a fun experience. In the United Kingdom, B2B payment delays are getting out of control.
This creates a golden opportunity for fintechs to make a lasting mark on the industry. Catering to B2B clients can help improve overall revenue and market position.
The B2B Payment Delays Increase
A recent study confirms how small businesses in the UK are hung out to dry when it comes to payments. This is especially true where past-due invoices are concerned. The average payment delay is 23 days. An absolutely unacceptable situation, and one that needs to be addressed pretty quickly.
In fact, this is a sharp decrease in performance compared to 2018. During that year, the average waiting time was “just” 12 days. It is uncanny to see these B2B payment delays grow longer as more time progresses.
Combined with the fact that over $44.5 billion is owned in total, the situation grows very dire. This translates to any UK SMB being owed $44,781 on average. There is some good news as well, however. Fewer invoices were paid late, although they still account for 39% of all B2B payments.
Cash-Flow Concerns Arise
With the average UK SMB being owed over $44,000, a cash-flow crisis ensues. Almost nine in ten companies confirm they reduce the number of orders to take on. There simply isn’t enough cash flow to engage in more projects. A very problematic statistic that creates plenty of opportunities for fintech companies.
One key challenge remains ahead for small B2B SMBs. Most of them aren’t sure if they need to forecast cash flow before engaging in a new contract. Solving this crucial problem will be a key challenge in the UK. Additional regulatory measures may help as well.
Rewarding Previous Culprits
In recent weeks, there has been some public dismay in the UK. Balfour Beatty is tapped as one of the contractors selected by the UK Crown Commercial Service. They are given an opportunity to build hospitals and schools.
Many people wonder why this company was chosen in the first place. Not that long ago, Balfour Beatty was suspended from the Prompt Payment Code. The company tends to engage in late payment practices. Rewarding such a company for its previous bad behavior is rather controversial.