Where are the best (and worst) areas for getting paid on time?

It’s fair to say the UK has a late payment problem. Most businesses have suffered more than their fair share of rainy days, waiting for the clouds to part and a payment to arrive - before their account empties. In fact, the government has announced a crackdown, following research from the Federation of Small Businesses that shows late payments lead to 50,000 business closures a year.

In our annual dig into our data, we found that half of the invoices sent by small businesses were paid late last year (that’s 49.4% if you want to be exact). That news certainly cast a cloud over our day - but we can’t say we’re surprised. For the last five years, the overall UK late payment rate has stayed steady at around the 49-54% mark.

But if we zoom in on our map, we can see that the outlook can change suddenly depending on where your business is based. So come with us as we tour the UK to find the best and worst areas for getting paid on time.

Sunshine expected

Where are the brightest prospects for prompt payments? Ipswich stayed sunny (for the second year running!) with only 21.5% of invoices paid late. We also saw clearer skies in Llandrindod Wells (32.2%), Hereford (32.5%), Wolverhampton (34.4%) and Bolton (37.9%).

While these numbers are certainly worth celebrating, it’s still a long way from where we want them to be. When one in three invoices paid late counts as fair weather, there’s still plenty of room for improvement.

Looking at the regional picture, the outlook is slightly better than average for businesses in the East of England who have 46.9% of invoices paid late, and the South West where the percentage is 47.4%. The nation known for best weather is Wales at 48%, though Scotland isn’t far behind at 48.5%. Maybe next year, Scotland!

Stormy weather threatened

Turning to the worst areas for late payments, dark clouds hang over the Isle of Man and East Central London, where a huge 73.2% and 72.6% of invoices are paid late. Also suffering more than their fair share of rainy days, we have Nottingham where 64.4% are paid late, Jersey on 63% and Blackburn on 60.8%. Nottingham finds itself towards the bottom of the table for the second year running - in 2022-23, 61% of invoices were paid late.

Zooming out to the broader picture, the worst regions are London (54% of invoices paid late) and the North East (51.8%). On a national level, Northern Ireland is trailing a long way behind on 62.4%.

We’ve got a full national and regional breakdown here.

How did we get this data?

Our research looked at invoice data from June 2023 to June 2024 across 150,000 UK small businesses using FreeAgent. For the purposes of this project, ‘paid late’ means paid more than three days after the payment deadline stated on each invoice. Our data is broken down by postcode, meaning that Ipswich, for example, includes the whole IP postcode area including towns like Bury St Edmunds and Aldeburgh.

Temperature change

So, can you use these numbers to predict the likelihood of rainy days for your business? Invoices consistently paid on time are still a distant dream - but there’s a lot of local fluctuation each year. For example, Manchester has previously topped the ‘best’ rankings with most invoices paid on time, while Sheffield had a stint in the ‘worst’ column. This year they’re both hovering around the national average - Manchester on 52%, Sheffield on 49.6%.

If your business is based in a big city - safe to say you might want to prepare for the worst and pack a brolly! Here’s the outlook for the ten biggest UK cities by population, ranked from best to worst.

The problem of late payments

Being paid late once is a bit annoying. The problem is that, as we’ve seen, late payments aren’t a one-off - they’re the rain on your parade most months. And that makes the already tricky task of staying on top of your cashflow even harder.

Large businesses tend to be more insulated from late payment issues, as they’re more likely to have large cash buffers or have access to loans and other forms of finance. But for small businesses, a couple of ignored invoices in a month can hurt. If you’ve ever found yourself losing sleep over an unpaid invoice, you are not alone! Our survey of small business owners in April 2024 found that 24.6% of them felt the future of their business was in jeopardy because of late payments.

So many small businesses are at the mercy of larger companies for their income, but sometimes they aren’t seen as a priority. There’s a lot more that could be done to encourage timely payments. One option many small businesses would support is making the Prompt Payment Code mandatory.

What on earth is the Prompt Payment Code?

If you know what the Prompt Payment Code is - well done! You’re in the 14.8% of business owners who have heard of it. If not, we don’t blame you, and here’s why…

The Prompt Payment Code is a code of practice businesses can sign up to with the Office of the Small Business Commissioner where companies agree to pay suppliers on time - but it’s voluntary. As of May 2024, just over 5,000 businesses had signed up. Of the small businesses that we surveyed, nearly half would like to make the Prompt Payment Code mandatory for all businesses.

As part of the new government action against late payments, the Prompt Payment Code is about to get a refresh. Later in 2024, it will be replaced by the new Fair Payment Code. The new code will be more ambitious, according to the Small Business Commissioner, setting higher standards including an exemplar ‘Gold’ category for those firms paying suppliers within 30 days.

The government has also pledged a major consultation on new laws to hold larger firms to account, including bringing in stricter payment reporting requirements. Read more on the government’s website.

Raining cats and dogs? Find the right umbrella

Late payments may always be a pain, but having the right tools can dull that pain into more of an… inconvenience.

FreeAgent has built-in tools to make chasing late payers easier, from payment terms you can personalise by customer to invoices that chase themselves. Plus, you can explore our different payment solutions to make it practically effortless for customers to pay you.