UK public authorities are among the worst in Europe for paying invoices in full and on time, according to research by credit management services company Intrum Justitia. The European Payment Index survey of over 5000 organisations across Europe has shown that UK public authorities owe around £6bn in unpaid invoices, many to small and medium sized organisations (SMEs) who are struggling to survive in the current economic climate.
Across UK public authorities, businesses and consumer groups, 2.4% of all invoices are never paid – an increase of half a percent compared to the same period last year. If all invoices across these groups were paid on time and in full, the money saved would equate to a liquidity injection of £39bn into the UK economy, says Intrum Justitia.
“On the one hand we have governments across Europe pumping huge sums of money into their economies to increase cashflow, yet on the other hand, these same entities are not paying invoices on time,” said Lars Wollung, CEO, Intrum Justitia. “If public authorities would pay on time it would help the cash flow of businesses in Europe, enabling them to invest faster and pay faster themselves.”
Key UK statistics:
- On average, UK government bodies pay invoices 20 days later than the agreed payment term.
- The percentage of debt that has to be written off by businesses in the UK has risen by 25pc over the past 12 months.
Key European statistics:
- If all European businesses and consumers paid their bills and invoices on time, the money saved from written off bad debt would equate to a €270bn cash injection for businesses throughout the European Union.
- If all public sector bodies across Europe paid their bills on time, it would be the equivalent of a €65billion boost to the European business economy.
- European businesses spend €25bn chasing late payments from consumers and businesses each year.
- Just 50% of all invoices across Europe are paid within 30 days (down from 53% in 2008).
- Over 70% of the respondents across Europe feel the payment risks will further increase the coming 12 months, compared to just 30% of those who took part in the 2008 survey.
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