According to recent research by BACS, the payment of invoices to UK SMEs, including limited company contractors and umbrella companies, is being delayed by an average of more than 40 days longer than the original invoice date.
This is particularly worrying news for umbrella companies who, by acting as a true employer to their workers, are bound to pay them each and every week regardless of whether the end client or recruitment agency has made payment to them or not.
The report found that the time takien to pay invoices has risen by nearly ten days over the last 12 months. This has had a devastating impact on some sectors, and particularly those where a healthy cash flow plays such a key role in the success or failure of a business.
Commenting on the findings, a spokesperson from BACS said that the extensive nature of late payments was having a “real impact” on businesses across the UK. The report also revealed that corporates are largely to blame for the latest trend, with nearly 40 per cent of respondents attributing them for the majority of their cash flow problems.
Albany, the umbrella company, was forced into insolvency earlier this year citing a lack of working capital as the route cause of it’s downfall. One can only hope that these latest figures will not signal more casualties in the umbrella company marketplace.
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