By Daniel Hunter
Small businesses in Britain are likely to be damaging their cash-flow because they wait too long to chase unpaid invoices, according to the UK’s leading online accounting system provider.
FreeAgent - which provides an award-winning online accounting system for small businesses and freelancers - believes that many small business owners could be giving their customers too much leeway when it comes to paying invoices, with some even waiting months until they chase up an outstanding payment.
Research that FreeAgent carried out with YouGov revealed that just one in six (14%) of small business owners said they would chase an unpaid invoice within the first week after it was due.
The poll of more than 500 people, who own businesses with five or fewer members of staff, also revealed that 19% of respondents said they would wait 1 to 2 weeks to chase an unpaid invoice, while 23% said they would wait 2 weeks to a month.
18% of small business owners polled said they usually chased unpaid invoices within 1-2 months, 4% said it took them between 2-3 months and 2% said they waited 3 months or longer before requesting payment for an outstanding invoice. A further 4% admitted that they never chased unpaid invoices at all.
“When you’re running a small business, it’s important to ensure that you get paid on time - and when invoices are overdue, you should really be chasing your customers up as soon as possible to request payment," Ed Molyneux, CEO and co-founder of FreeAgent said.
"However, our research suggests that many small business owners are letting their customers get away with not paying them for weeks, or even months, after their invoices are due.
“That’s not an ideal scenario for any small business owner, because if you’re not getting paid on time you won’t have the money you need to grow your business. Ideally you should be following up as soon as the payment deadline on your invoice has passed, or at the very least chasing it within the first week after it’s due.
“Not everyone enjoys chasing up their invoices, and it can feel awkward to demand payment from your customers - especially if you are friendly with them. But, by setting aside a regular time every week to go through your invoices, check your business finances and review your expenses, you’ll find it easier to identify who needs to pay and chasing your invoices will become an integrated part of your regular business routine."
Join us on