More than a third of payments owed to small firms based in Northern Ireland by larger business customers are settled after 30 days, new research shows.
According to the study by Lloyds Bank and the UK’s small business commissioner, 34% of invoices issued by small businesses here take longer than 30-day payment terms, which is above the national average of 32%.
Invoices are taking, on average, 41 days to be paid to small local firms – four days longer than the national average of 37 days and well above the small business commissioner’s recommended exemplar of 30 days.
It places us alongside the East Midlands as the joint second worst part of the UK for small firms to be paid by large customers, only behind Yorkshire and The Humber.
As a result of the research, Paul Uppal, the UK’s small business commissioner, is to recommend a traffic light warning system to give small firms a signal about which large businesses pay their bills late.
The study, based on data from 7,010 companies, found that 65% of large firms in the UK have an average bill payment time of more than 30 days, while one in five (21%) reports an average bill payment time of 50 days or more.
Mr Uppal suggested that larger companies are in effect using their supply chain to finance their businesses.
“The effect of late payment on small firms in Northern Ireland can be devastating,” he said.
“It impedes business growth, but also has an impact on the lives and mental health of those running small firms.”