Northern Cities Come Out Top On Prompt Payment

The government’s much-vaunted ‘Northern Powerhouse’ may have turned out to be little more than a catchy phrase scribbled down on the back of a Chancellor’s fag packet. But at least contractors and small suppliers operating in the North of England’s biggest cities are more likely than most to get paid on time.

In a survey carried out by FreeAgent, small traders in Manchester reported the lowest rate of late payments nationwide. According to the findings, 86% of invoices issued by freelancers and microbusinesses in the city are paid by the due date - which compares very favourably to the national average of 52%.

If you were looking for the next best location to set up a small business where you would have a better than fair chance of getting paid on time, you wouldn’t have to go further than a short hop across the Pennines to Leeds. 81% of invoices in the West Yorkshire city are paid on time, followed in third place by close neighbour York, where 72% of payments are within terms.

However, the survey also revealed a less than rosy picture of payment practices in other northern cities. Making up three of the worst five locations for late payments nationally were Sheffield, Stoke-on-Trent and Chester. These were only narrowly beaten to first place on the blacklist by Peterborough, where an astonishing seven out of 10 invoices are not paid on time.

Work to be done

The disparity in the percentage of invoices that get paid on time from city to city just serves to underline how much work needs to be done to reverse the UK’s appalling late payments culture. Even in relatively high performing cities like Leeds and York, the fact that a fifth and a quarter of invoices respectively do not get paid according to the terms agreed by contract should not be seen as acceptable.

In cities like Peterborough where late payment culture has clearly become the norm, drastic measures need to be taken. We are completely in agreement with FreeAgent chief executive Ed Molyneux, who argues that the creation of a Small Business Commissioner to ‘champion’ small traders on the issue of late payments is nowhere near tough enough.

It is great that in some cities and regions of the UK, contractual payments between firms do operate broadly in line with how they are supposed to. But when SMEs are currently waiting on a staggering £14.9bn in overdue monies they are entitled to, we need much, much more than good examples and well-meaning champions.

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