UK Micro SMEs Owed $26B From Corporate Buyers

The market may be sick of hearing about the U.K.’s late payments problem. The topic has been debated and examined from all angles in the media and by policymakers, especially in the recent electoral victory of Prime Minister David Cameron.

But despite the constant hashing out of the matter, new research that puts a price tag on the effects of late payments in the U.K. highlights just how dire and important the situation really is. Quickbooks has released the findings of its survey on the matter and found that microbusinesses in the nation are owed $23.6 billion from their corporate buyers.

What’s more, Quickbooks found that nearly one-third of businesses surveyed have been forced to take out loans or other financing products to manage their cash flow as they struggle to deal with their outstanding invoices.

On average, microbusinesses had to spend 19 working days of their operations just chasing down those unpaid bills.

“When you’re putting out fires and jumping over hurdles on a daily basis, you don’t need the distraction of worrying about whether you’ve been paid in a timely manner for your products or services, so it’s disheartening to see the extent of the issue,” said Intuit managing director Rich Preece in response to the findings. He added that it is especially concerning because these microcompanies, which have between 1–10 employees, make up 96 percent of all U.K. firms.

But according to Quickbooks researchers, the matter also stems from inefficient processes on the end of the microcompany. For example, the study found that just 36 percent of respondents issued their invoices electronically via email.

“This isn’t just about late payments,” said Preece. “It’s about expecting and facilitating payments much more quickly, and the impact this can have on the millions of very small firms across the U.K. There’s major potential to dramatically improve microbusinesses’ cash flow and save valuable time by making it easier for their customers to pay — particularly when the vast majority are more than happy to settle up immediately themselves when dealing with small businesses.”