Unpaid invoices costing UK economy £1.4 trillion
· 13% of small business invoices remain unpaid each year
· 39% of invoices fail to be paid on time
· 76% of the 25 employee hours per week spent chasing invoices could be saved with e-invoicing
LONDON, 7 February 2012 – Research released today from Tradeshift finds that 13% of invoices issued by UK small businesses remain unpaid every year, causing a £1.4tr black hole in the economy. At a time when life is tough for many small businesses, just under a third (30%) said cash flow issues caused by unpaid invoices could force them to lay off staff and 20% said they would have to turn down business or take out a business loan.
The responses to the Tradeshift survey from UK small business owners and financial decision makers are revealed in a report entitled “Getting Paid”, available to download from shiftbusiness.net/getting-paid. It found that small businesses issue 528 invoices on average every year and yet 69 of these remain unpaid, totaling 177m invoices.
In addition to these unpaid invoices and, despite the majority of small businesses having payment terms of less than 60 days, 39% of all invoices issued are not paid on time. When asked about the reasons for non-payment of invoices, 34% put slow payers at the top of the list, followed by companies going out of business (24%), disputes over work (19%), cash flow (11%) and administration (9%).
The resulting administrative burden of chasing these payments requires an average of 25 employee hours per week spent managing, processing and chasing invoices. Small business owners estimate that 76% of this time could be saved if all invoices were managed online, but only 28% said they currently handle invoices in this way. This burden is magnified by the fact that over a third of invoices are still received by post.
Mikkel Hippe Brun, Co-founder and Chief Strategy Officer at Tradeshift, an online platform that aims to revolutionise e-invoicing by eliminating charges for small businesses, sees this as a dangerous trend that is crippling UK companies: “For centuries, the invoicing process has held small, innovative businesses at the mercy of others with a clear disregard of agreed payment terms and damaging cultural precedents. This is 2012 and there’s no reason why invoicing shouldn’t undergo a revolution that fits the modern times in which we live rather than acting as a noose waiting to drop around the necks of the UK’s army of small businesses.”
The full report – available to download from shiftbusiness.net/getting-paid – contains the full research as well as tips for small businesses looking to reduce the burden of unpaid invoices. Small businesses can use Tradeshift’s e-invoicing platform free of charge. For more information, visit www.tradeshift.com.
The research surveyed financial directors and business owners at 100 UK-based small and medium sized enterprises – companies with fewer than 250 employees. The research was carried out online in November 2011 by OnePoll.
Tradeshift connects businesses on a secure online network to help them work collaboratively and manage tasks such as invoicing and cash flow. In the Tradeshift cloud, businesses create a network with their suppliers, customers and partners to streamline common business processes powered by the latest social technologies.
Launched in May 2010, Tradeshift already has 70,000 companies across 190 countries. Businesses on the Tradeshift platform include ASP NHS, the French Government, Kuehne+Nagel, TDC, DT Group and DSV. In 2010, Tradeshift was awarded Best Enterprise at The Techcrunch Europa awards and Most Innovative Solution by Financial-I. In 2011 the company was also highly commended for “Kicking ass globally” at the Techcrunch Europas.
Tradeshift Inc has offices in Copenhagen, London, San Francisco, Paris, Frankfurt and Amsterdam.
Tradeshift fundamentally shifts the way you do business. For more information, visit http://tradeshift.com/