Micro-businesses each lose nearly £2k per year in unpaid invoices
Non-payment of invoices is a huge problem for the nation’s freelancers, contractors and micro-businesses, according to new evidence from cloud-based contractor accountancy software company FreeAgent.
Micro-business owners will likely know the frustration of late or non-payment of invoices, but may well have underestimated the huge costs associated with writing off unpaid bills.
According to research carried out by FreeAgent, an average UK micro-business will write off £1,804 worth of unpaid invoices each year.
With 5 million micro-businesses (employing between 1-9 people) in the UK, FreeAgent says that more than £9 billion worth of invoices will be written off by micro-businesses in Britain this year.
This is a problem for the treasury too. FreeAgent estimates that HMRC will miss out on £800 million in revenue because of non-payment of micro-business invoices.
FreeAgent CEO and Co-Founder Ed Molyneux, himself a former freelancer, was keen to stress the significance of this problem.
He said: “One of the biggest issues that smaller businesses face is getting paid for the hard work that they do. They regularly have to deal with clients paying late, or not at all, and we’ve found the problem is so widespread that these businesses are writing off almost two thousand pounds in unpaid invoices in their accounts each year.”
But the actual costs of non-payment could be much higher for some businesses.
He said: “While it’s possible that some business owners may be incorrectly writing off some of their invoices, there are likely to be many more who are still holding out hope for payment and have not yet written them off as bad debt. Therefore the actual amount of ‘lost’ money per year may be much greater.”
FreeAgent’s low cost accountancy software is particularly popular with contractors, freelancers and other micro-business owners. It includes a number of features to make invoicing hassle-free, and helps small independent operators get paid on time.
One of the most popular features among FreeAgent users is the automatic payment reminder emails. These can be set up by users to go out when payments are overdue – eliminating the need for an awkward phone call.
FreeAgent also comes with a range of online payment options that make getting paid simpler for both the business and the customer. Freelancers and micro-businesses simply send their details with the invoice and clients will be able to pay them directly from the invoice email, without the need to set up a bank transfer.
For more advice on how to use FreeAgent, or whether it is right for your micro-business please speak to a member of the Cloud Accountant team. Call: 0808 281 0303