News

February 14, 2012

One in ten invoices go unpaid each year

More than one in ten invoices issued by small firms go unpaid each year, research by business network Tradeshift has revealed.

The Tradeshift survey of 100 business owners found that, on average, 39 per cent of bills were not paid on time while 13 per cent of invoices sent out to customers failed to get settled at all.

When asked why invoices remained outstanding, one third of business owners blamed slow payers, a quarter said it was down to companies going out of business, and one in ten cited customer cashflow problems.

Late and non-payment remains a huge issue for small firms, often causing cashflow problems and difficulties in hiring staff or taking on new business.

To help small-business owners, the Association of Chartered Certified Accountants has published the free guide Get Paid! offering credit management tips such as how to chase payments.

Earlier this month, the Government also unveiled its new prompt payment drive, in which it urged small firms to sign up to its Prompt Payment Code which promotes best practice and sets out clearly defined payment terms.

Other Government advice for small businesses included agreeing payment terms before delivering orders, and using electronic invoicing where possible to speed things up and record invoice delivery dates.

The Government campaign has been backed by the Forum of Private Business (FPB), which said late payment “had long been the scourge of small firms”. “It can decimate cashflow, prevent growth and threaten firms’ very survival – but there are steps business owners can take to minimise the problem,” said FPB chief executive Phil Orford.

• Access the ACCA Get Paid! guide
• Late payment to small firms increase by 10 per cent