Late payments to Welsh firms reaches 21 month high

The number of overdue invoices on the books of Welsh businesses has reached a 21-month high, shows new research from the UK’s insolvency and restructuring trade body R3.

Its analysis of data provided by Cardiff-based Creditsafe shows that businesses in Wales in January had a total of 152,973 overdue invoices on their books last month. This was the highest number on record since April 2023’s figure of 153,837.

Overdue invoice numbers rose by 12.7% year-on-year from January 2024’s total of 135,773, and rose by 5.2% when compared to the previous month’s total of 145,366.

Bethan Evans, chair of R3 in Wales, said: “The last couple of years have been incredibly challenging for Welsh businesses. While a decline in inflation levels in 2024 provided some relief by slowing the pace of rising costs, this was offset by a host of other mounting challenges.

“Ongoing supply chain disruptions throughout last year made it much harder for businesses to operate smoothly, while high and rising energy costs have continued to squeeze profit margins. These difficulties were further compounded by new pressures introduced in the autumn Budget, with businesses now having to reassess their finances in the face of from April rising employers’ National Insurance Contributions and an increase in the minimum wage.

“It’s clear from these statistics that many firms are now feeling the impact of these ongoing challenges, with businesses having to delay more and more payments.”

The total number of Welsh companies with overdue invoices on their books rose to 18,631 in January, the highest level since February 2023’s total of 18,648.

The number of companies with overdue invoices on their books rose by 6.4% year-on-year from January 2024’s total of 17,510.

Ms Evans, who is a partner at business advisory and accountancy firm Menzies, said: “Over the past couple of years, many businesses struggled to pay their bills on time, and as conditions have not improved enough, these debts have built up over time. This has placed immense pressure on Welsh businesses, with more and more now unable to meet their payment deadlines amidst ongoing financial challenges.

“If conditions don’t improve early this year, we could see more companies facing even greater pressures, with some turning to insolvency processes to address their financial issues.