UK SMEs chasing £50bn in late payments
Small and medium sized businesses (SMEs) across the UK are chasing a combined £50bn in late payments.
New research from digital banking platform Tide reveals that the average UK SME is chasing five outstanding invoices at once, wasting an hour and a half every day.
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In total, this means that almost 900,000 hours a day are wasted by companies trying to get paid for the work they have done.
The average amount owed per invoice is £8,500.
London-based businesses are the hardest hit, with companies in the capital claiming to have an average of seven invoices outstanding.
Those who are self-employed have an average of four outstanding invoices at any one time, amounting to almost £1,000.
Late payments are a significant issue for SMEs, with research from the Federation of Small Businesses in 2016 stating that 50,000 small businesses are put out of business annually by this behaviour, a £2.5bn hit to the UK economy.
Oliver Prill, Tide’s chief executive, said: “It has been known for a while now that late payments are crippling SMEs, with the government having tried a number of times to address the issue.
“It is however shocking to see exactly how much time SMEs, and particularly the self-employed, are wasting by having to chase clients to pay promptly. Cash flow is crucial for SMEs, and just a few late payments can tip them into danger of becoming insolvent.”
Scottish businesses fare little better than London firms, with businesses north of the border sitting on six unpaid invoices.
Those operating in the South West have it best, only waiting on three to be paid.
Tide surveyed 1,000 chief executives and senior management staff at SMEs to analyse their use of time over the working day.
The study found that such figures are spending almost a third – 30 per cent – of their time on unprofitable admin tasks such as chasing payments and managing expanses.
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Prill added: “The fact that SMEs are spending 30 per cent of their time undertaking unprofitable admin tasks is unsustainable.
“SME owners and leaders are master jugglers, they are proficient at undertaking multiple tasks at once and aren’t afraid of working long hours to fit everything in, however there is a concern that the time taken on admin will have a negative impact on the growth and success of a business.”