What’s the biggest problem faced by Start-Ups and micro businesses?
Well, ask any accountant and they’ll tell you it’s generally the thorny issue of late payment. You may be fantastically good at what you do and have big plans for business expansion, but if bigger companies stall when it comes to paying for your services, then you’re going to find the going tough. But how tough is it really? Are micro businesses suffering because larger firms drag their heels when it comes to payment?
Well, new research by Intuit Quickbooks has found that UK micro businesses are owed nearly £17bn in outstanding payments.
The consequences of these late payments it claims is “stifling the growth” of the businesses which it believes are underpinning the nation’s economic recovery.
The report, which surveyed 250 micro business owners – that is companies with one to 10 employees, found that the reluctance of bigger businesses to pay promptly is having a “major impact” on cash flow. How serious is the problem? Well Intuit’s figures confirmed the fears of most accountants. It claimed that almost a third 932% of micro business owners found the problem had got so serious that they were forced to take out loans or credit to pay suppliers and wages.
The problem was compounded because late payment also impacted on productivity, as micro business owners were forced to spend on average nearly 4 weeks (19 days) chasing outstanding invoices each year.
Micro businesses account for 96 per cent of all UK firms according to Intuit, and managing director, Rich Preece, fears the continuing late payment culture is ‘stopping entrepreneurs focusing on what really matters’. He said:
“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.”
“This isn’t just about late payments, 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 UK.
“There’s major potential to dramatically improve micro businesses’ 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,” he added.