{"id":2872,"date":"2023-06-29T08:58:29","date_gmt":"2023-06-29T08:58:29","guid":{"rendered":"https:\/\/mysourcefunding.com\/funding\/unpaid-invoices-over-50-of-uk-small-businesses-are-paying-the-price\/"},"modified":"2023-06-29T08:58:30","modified_gmt":"2023-06-29T08:58:30","slug":"unpaid-invoices-over-50-of-uk-small-businesses-are-paying-the-price","status":"publish","type":"post","link":"https:\/\/mysourcefunding.com\/?p=2872","title":{"rendered":"Unpaid invoices: over 50% of UK small businesses are paying the price"},"content":{"rendered":"
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Over half of small and medium enterprises (SMEs) in the UK are still struggling with unpaid invoices from 2022, according to a recent survey conducted by <\/span>NerdWallet<\/b>.\u00a0<\/span><\/p>\n

The survey explored the experiences of SME owners, decision-makers, and freelancers in the UK regarding late payments and their effects on their businesses.\u00a0<\/span><\/p>\n

The results highlighted the increasing problem of outstanding invoices, with over half of the businesses still awaiting payment for invoices from the 2022 tax year.<\/span><\/p>\n

How unpaid invoices impact UK SMEs<\/h3>\n

The survey revealed that late payments cause significant disruptions and pose real challenges for business owners. They disrupt the <\/span>cash flow<\/b> necessary for<\/span> completing payroll<\/b> for their employees and covering essential expenses on time.<\/span><\/p>\n

They also lead to cutbacks in <\/span>expenditure and recruitment<\/b> and impact staffing levels. Most concerning, many business owners were not actively pursuing payment for overdue invoices or charging interest on repayments, despite being entitled to do so under UK legislation.<\/span><\/p>\n

Whilst the data showed that around 35% of invoices were less than a month overdue, and 27% were between one and three months late, an alarming 20% of business owners reported having outstanding invoices from four to six months ago.<\/span><\/p>\n

Equally, 39% of SMEs had either already made or were considering making reductions to their overheads as a result of unpaid invoices. These reductions included downsizing office spaces, adopting <\/span>remote working arrangements<\/b>, and cutting team social spending budgets.\u00a0<\/span><\/p>\n

Recruitment efforts were also affected, with 28% of businesses pausing hiring activities due to outstanding invoices \u2013 and one-fifth of business owners reported freezing planned pay rises for employees, and 22% indicated they may have to make <\/span>staff redundancies<\/b> to offset the impact of late payments.<\/span><\/p>\n

In terms of pursuing payment, most business owners typically waited a week before taking action for unpaid invoices. Half of the respondents sent reminders every week until invoices were paid, while a quarter pushed for payment on a daily basis. 40% of SMEs followed up with a phone call or letter in case of payment failure. Surprisingly, only 23% charged interest on top of the agreed amount for each reminder, and merely 11% claimed <\/span>debt-recovery costs<\/b>.<\/span><\/p>\n

Some businesses had to resort to more drastic measures to collect payments. 14% had to engage a debt collection agency, and 8% were forced to write off the invoice entirely.\u00a0<\/span><\/p>\n

Shockingly, 22% of small business owners were willing to wait and do nothing while the client remained unpaying.<\/span><\/p>\n

Managing unpaid invoices: tips for taking back control<\/h3>\n

It’s essential for business owners and freelancers to find ways to mitigate the cash flow issues caused by late payments. Here are a few <\/span>practical tips:<\/b>\u00a0<\/span><\/p>\n