Unpaid invoices costing UK economy £1.4 trillion

March 17, 2012 - PRLog -- Research released today from Tradeshift finds that 13% of invoices issued by UK
small businesses remain unpaid every year, causing a £1.4tr black hole in the
economy. At a time when life is tough for many small businesses, just under a third
(30%) said cash flow issues caused by unpaid invoices could force them to lay off
staff and 20% said they would have to turn down business or take out a business
loan.

The responses to the Tradeshift survey from UK small business owners and financial
decision makers are revealed in a report entitled “Getting Paid”, available to
download from shiftbusiness.net/getting-paid. It found that small businesses issue
528 invoices on average every year and yet 69 of these remain unpaid, totaling 177m
invoices.

In addition to these unpaid invoices and, despite the majority of small businesses
having payment terms of less than 60 days, 39% of all invoices issued are not paid
on time. When asked about the reasons for non-payment of invoices, 34% put slow
payers at the top of the list, followed by companies going out of business (24%),
disputes over work (19%), cash flow (11%) and administration (9%).

The resulting administrative burden of chasing these payments requires an average of
25 employee hours per week spent managing, processing and chasing invoices. Small
business owners estimate that 76% of this time could be saved if all invoices were
managed online, but only 28% said they currently handle invoices in this way. This
burden is magnified by the fact that over a third of invoices are still received by
post.

Mikkel Hippe Brun, Co-founder and Chief Strategy Officer at Tradeshift, an online
platform that aims to revolutionise e-invoicing by eliminating charges for small
businesses, sees this as a dangerous trend that is crippling UK companies: "For
centuries, the invoicing process has held small, innovative businesses at the mercy
of others with a clear disregard of agreed payment terms and damaging cultural
precedents. This is 2012 and there's no reason why invoicing shouldn’t undergo a
revolution that fits the modern times in which we live rather than acting as a noose
waiting to drop around the necks of the UK’s army of small businesses.”

http://www.griffinandking.co.uk/

The full report – available to download from shiftbusiness.net/getting-paid –
contains the full research as well as tips for small businesses looking to reduce
the burden of unpaid invoices. Small businesses can use Tradeshift’s e-invoicing
platform free of charge. For more information, visit www.tradeshift.com.

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Griffin and King are a leading firm of Insolvency Practitioners within the West Midlands with offices covering Dorset, Hampshire, Shropshire and Mid Wales