UK businesses waste 56.4m hours a year chasing late payments
New research released today highlights the plight of poor payment practices on UK small businesses, with around 56.4 million hours of time taken up chasing overdue and late payments annually. Which, for the typical small business, is more than a working week spent every year, just chasing down money that’s owed – time that could be better spent elsewhere.
In fact, the independent study of more than 500 small businesses, found that almost a third (30%) would use time saved on chasing payments for working on their existing businesses or completing tasks that encourage growth such as: improving business processes (19%), marketing the businesses (17%) and connecting with new clients and customers (16%).
Combined, the time spent chasing invoices each year equates to a staggering £6.3bn, once you take into consideration the typical charge out rates for executives at micro, small and medium businesses. The cost of this time has had to be absorbed by the company, adding to the deficit in the P&L and inconvenience of not having the crucial liquid capital in the bank when it’s needed.
Chris Evans, VP and UK country manager at Intuit QuickBooks, who commissioned the research to coincide with the announcement of a new Cash Flow 90-Day Planner, said: “Cash is oxygen for small businesses and without it they cannot breathe. The combination of chasing invoices and bad payment practices means small businesses can run out of accessible cash. This has a real impact on their ability to take on new work, pay suppliers, their employees or themselves on time and can add unnecessary extra stress into their lives.”
With over three quarters of UK business owners struggling with sleepless nights, today’s research uncovered that over a fifth (22%) are chasing invoices as soon as they wake up and before their working day starts.
Surprisingly, despite nearly three fifths (56%) of all time spent chasing for payments taking place outside of the working day and eating into personal downtime, given the chance only 15% of small business owners would spend that time with friends and family. The workforce doesn’t fair much better, with only 14% of bosses choosing to reinvest that time meeting with staff or team bonding.
Poor payment practices are a big and compound problem for small businesses, especially when on average each of them is waiting for 9 outstanding invoices to be paid at any one time and 11% of those typically get paid more that 200+ days late.