New research shows the risk of late payment for freelancers and small businesses in Kent
By Inna Kaushan, co-founder of Solna
The data of over 3million SMEs up and down the country has been analysed to find out which regions are the highest and lowest risk for freelancers and small businesses when it comes to getting paid on time. 121 areas of the UK including areas in Kent were scored and ranked based on how quickly businesses pay their invoices.
According to the Federation of Small Businesses, 58% of their members are owed up to £10,000 in late payments from their clients. 15% are owed between £10,000 and £20,000, and an incredible 27% are owed over £20,000 from their late paying clients.
Invoicing platform Solna, which undertook the new research on late payments, scored businesses from 1 to 5, based on their creditworthiness and ability to pay invoices on time. Businesses scoring 5 have the best credit rating and consistently pay on time, businesses scoring 1 have lower credit ratings and regularly pay late.
All scores were ranked to reveal the lowest and highest risk areas in the UK for late payments.
For Kent this shows the lowest risk area as Tunbridge Wells and the highest risk area as Dartford.
Late payments: Lowest risk areas to Highest Risk areas in Kent
There is a combination of cultural, geographical, and economic reasons why people in more rural areas have better scores than businesses based in London and other urban areas. Businesses in a smaller community are more likely to pay their suppliers on time because they’re more likely to know them and becoming known for unreliability could be really damaging to their business in such a small world.
For small businesses and sole traders in the highest risk locations in Kent or around the country, dealing with late payers can be time-consuming and frustrating. Late payments can damage their cash flow and prevent growth, making it harder to win new business, and pay for essential resources. Financial stress can be emotionally draining for business owners and freelancers, affecting their ability to pay their business’ bills as well as their own. They also might be forced to let staff go, or even close their operations for good.
When a business delays payment because of cash flow issues, they create cash flow issues for their suppliers too. Those suppliers might then delay paying their own invoices, and on and on it goes.
The current political climate is also a concern. Brexit uncertainty has an impact on small businesses in Britain. While the landscape is fluctuating, businesses need to make sure they’re doing everything they can to manage cash flow, prevent late payments, and stay prosperous in order to cope with whatever is around the corner.
Inna Kaushan is co-founder of Solna, a smart invoicing platform powered by credit score data. Solna speeds up the invoicing and payment process for freelancers and small businesses. Through leveraged credit data that is overlaid on the platform’s invoicing and reporting functionality, users get a clear picture of their customer’s financial health and their overall exposure to risk. The system’s automated credit control functionality automatically chases overdue invoices – freeing up time and ensuring faster payment.
Solna’s revolutionary combination of invoicing and overlaid credit scores makes it a business owner’s new best friend. Solna users can see credit score information about their new clients before they begin working with them, allowing them to calculate risk and make informed decisions. This includes their credit limit, credit score, and key metrics to judge financial stability, all displayed with helpful graphics and illustrative colour-coding.
Inna Kaushan believes it’s crucial for sole traders and startups to understand their client and customers’ credit score, as well as their own. “Solna users can see which businesses pose a higher risk when it comes to paying invoices on time. Your business’ credit risk can affect its value to investors, and the rates you receive from lenders. Both scores can have a big impact on a business’ financial future.”
Solna is smart invoicing for smart companies. Small businesses and freelancers can create simple branded invoices, send custom, automatic reminders to late payers, and track all invoices until they’re paid. Best of all, it’s completely free.
While late invoice payments continue to be a problem for small businesses, they’ll struggle to grow and create employment opportunities. With this research, we hope to shine a light on what could be contributing to a culture of late payments, and what SMEs, startups, and freelancers can do about it.