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New research: UK SMEs chasing £50bn in late payments

New research: UK SMEs chasing £50bn in late payments

Tide has long known that the time spent chasing late payments is an issue for SMEs, but our latest research has revealed that SMEs across the country are chasing more than £50bn worth of late payments*. 

We surveyed 1,000 CEOs, founders, directors and senior management staff at SMEs in December to analyse their use of time during their working day. 

The study found that the average UK SME is chasing five outstanding invoices at any one time, amounting to an average of £8,500 being owed and 1.5 hours per day – or almost 900,000 hours in total, across all SMEs, per day – being used. 

People who are self-employed and working alone have an average of four outstanding invoices at any one time, amounting to almost £1,000. They claim to spend one hour per day chasing up these invoices. Businesses with between 10 and 50 employees have an average of 7.5 invoices outstanding, amounting to over £13,000 being owed.  

Businesses based in London have the roughest ride in terms of late payments, with businesses in the capital claiming to have an average of seven invoices outstanding, with over two hours per day spent chasing.  

London is closely followed by Scotland, with businesses there having an average of six unpaid invoices, equating to an hour and a quarter per day spent asking for payment. Businesses in the South West have it best, waiting on three invoices to be paid.

Late payments are a significant issue for SMEs, with research from the Federation of Small Businesses in 2016 stating that 50,000 small businesses are put out of business annually by this behaviour, a £2.5bn hit to the UK economy**.

Oliver Prill, CEO of Tide, said: “It has been known for a while now that late payments are crippling SMEs, with the government having tried a number of times to address the issue. It is however shocking to see exactly how much time SMEs, and particularly the self-employed, are wasting by having to chase clients to pay promptly. Cash flow is crucial for SMEs, and just a few late payments can tip them into danger of becoming insolvent.”

In addition to wasting time chasing payments, decision makers and senior leaders at SMEs are spending 30% of their working day (12 hours per week) on unprofitable admin tasks, based on the average weekly hours worked. This is equal to almost two and a half hours each day (30%) – totalling 12 hours per week spent on tasks such as banking, expense management, book-keeping and accountancy.

83% say they regularly work outside of ‘normal’ office hours, with more than half (55%) working weekends and 2 in 5 working on bank holidays (40%). 

Oliver Prill added: “The fact that SMEs are spending 30% of their time undertaking unprofitable admin tasks is unsustainable. SME owners and leaders are master jugglers, they are proficient at undertaking multiple tasks at once and aren’t afraid of working long hours to fit everything in, however there is a concern that the time taken on admin will have a negative impact on the growth and success of a business. 

The amount of admin necessary in running a business has long been an issue, and so the introduction of technological solutions such as Tide are crucial in helping SMEs to be more productive. By connecting a current account to tools that help with the management of expenses, creation and payment of invoices, credit applications and accountancy software is helping SMEs to avoid the repetition of many processes and allowing them to spend less time on banking and admin and more time on growing their businesses.” 

Research conducted by Atomik Research among 1,002 SME decision makers from the UK. The research fieldwork took place on 13 – 18 December 2019. Atomik Research is an independent creative market research agency that employs MRS-certified researchers and abides by the to MRS code.

*Based on 5.9 million SMEs, according to The Department for Business research published in October 2019
**Federation of Small Businesses research, published 16 Nov 2016

Sarah Penney

PR and Communications Manager

Tide Team

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