The big picture: Ipswich's performance is significantly better than the UK average of 49.3% and stands out regionally and nationally as "the area least affected by late payment" in the country.
Why it matters: Cash is king, the old saying goes, and it couldn't be more true for small businesses, for which managing a healthy cash flow is crucial. For many, being paid late can have serious consequences.
Another recent survey of small business owners by FreeAgent revealed:
24.6% of small businesses said they had felt their business's future was in jeopardy due to late payments
55.4% believed the Small Business Commissioner should have greater powers to tackle the issue
46.1% thought the Prompt Payment Code (PPC) should be mandatory for all businesses
By the numbers: Here's how Ipswich compares to other towns and cities in the region:
Ipswich (21.5%)
Peterborough (47%)
Colchester (48.4%)
Chelmsford (48.7%)
Southend (49%)
Cambridge (50.8%)
Norwich (51.5%)
What they're saying: James Cook, Director at Warehouse Digital, a video production company in Ipswich, said:
"Small businesses, particularly young start-ups, rely heavily on invoices being paid on time. If you're not in the fortunate position to have access to any grants or funding and rely on profits alone to build and run your business, cash flow can be a big issue.
"I know of businesses that have had to use director's personal finances to float the business bank account whilst waiting for invoices to be paid, often from much larger companies. There have been times where we are relying on an advance for a future contract to help us bridge the gap to pay the wages that month. The growing pressure from inflation and the cost of living crisis is still playing a large part in day-to-day life, both personally and for the business."
Zooming out: While Ipswich businesses are leading the way, the overall trend shows that late payments are increasing nationally, with the UK average rising from 43% the previous year to 49.3% in the period studied.
Roan Lavery, CEO and co-founder of FreeAgent, expressed concern about the trend:
“Maintaining a healthy cash flow is the number one priority for anyone running a business. However, the vast majority of small businesses simply don’t have the luxury of being able to absorb late payments into their accounts - they need to get paid promptly to keep themselves afloat.
"It's therefore very concerning to see that the level of late payment has increased in recent years, and that nearly half of invoices in the UK were not paid on time over the past 12 months. This isn't just a case of payments coming a few days or weeks late, as some of these invoices take months to settle up or - in some cases - won't be paid at all."
Lavery also called for government action:
"I hope, therefore, that our new government will commit to bringing in new legislation or putting more resources into the Small Business Commissioner's remit, so that the chronic issue of late payment can be properly tackled."
The bottom line: With the lowest late payment rate in the UK, Ipswich's prompt payment culture creates a more stable environment for small local businesses to thrive.
Sources
FreeAgent’s research analysed invoices sent by UK small businesses across its 150,000 customer base from June 30th, 2023, to June 30th, 2024.
