A new year, a new decade even - but still the damning picture of just how much damage the UK’s late payment culture is doing to the small business economy continues to develop.
The latest depressing statistics, courtesy of digital business banking platform Tide, show that UK SMEs are on average spending a staggering one and a half hours every day chasing unpaid invoices. When you extrapolate that across the economy, that translates into 900,000 working hours being lost every single day.
Tide’s numbers come from a survey of more than 1000 SMEs carried out in December 2019. The responses indicate that small businesses are chasing an average of five overdue invoices at any one time, amounting to £8,500 in money owed.
The issue appears to get worse the larger the business is. Sole traders and contractors who took part in the survey were chasing an average of four invoices at any one time, with an average value of £1000. But among companies with between 10 and 50 employees, this rose to between seven and eight invoices being outstanding at any one time, with an average of £13,000 unpaid.
Tide quite rightly put its new findings in the context of other alarming figures which have already underlined just how urgent action to tackle late payment culture is. Back in 2016, the Federation of Small Businesses found that late payments were causing as many as 50,000 SMEs to go under every year, representing a £2.5bn hit to the economy. As recently as October last year, the government estimated that UK small businesses were chasing around £50bn in unpaid invoices at any one time.
Tide’s new figures reveal another aspect of the damage late payment culture is doing - not only are SMEs fighting a constant battle with cash flow because they are struggling to get hold of money they are rightfully owed, they are also wasting a huge amount of time chasing these payments, distracting their focus away from core business. Tide’s survey also revealed that small business owners and decision makers are spending as much as 12 hours a week - a third of their working lives - on unprofitable admin tasks, with chasing payments a chief culprit.
It is a basic principle of business that more time spent on profitable tasks leads to a greater likelihood of success. When the burden of unprofitable admin is combined with stemming a business’s cash flow, it is no wonder that thousands of SMEs find they cannot cope with this entirely unfair double whammy.
If you’re a small business feeling the pinch from overdue invoices, you don’t have to battle it out alone. Safe Collection’s fast, efficient, professional debt collection service can take the strain off chasing late payments, with all costs in successful cases recovered from the debtor. Contact us today to find out more.