UK micro-businesses are owed over £16.9 billion by their customers, new research from Intuit QuickBooks, the global leader of online accounting software has found. Micro-businesses – with up to ten staff – account for 96% of all firms in the UK; this slow payment culture is stifling growth amongst the UK’s most important, but also most vulnerable businesses.
The reluctance to pay promptly is having a major impact on cash flow, driving them to resort to additional borrowing: 32% of respondents stating they have had to take on loans or credit to pay suppliers and wages, putting increasing strain on the business. It is also causing micro-businesses across the UK to spend an average of 19 working days per year chasing invoices.
This attitude to payments is in stark contrast to business owners’ attitudes in their personal lives. 93% of respondents claimed they are happy to pay immediately as a consumer, but many do not even ask their customers to pay immediately in business. In fact, 94% of those surveyed who wait up to a month to invoice stated they were happy to pay upfront as a consumer.
One issue at the heart of the problem is our dependence on the invoicing process. The research found that only 36% of micro-businesses issue e-invoices via email with many still issuing traditional paper invoices – and some waiting up until a month after completion of work to do so.