KashFlow calls on businesses to pay invoices on time to help growing UK economy
Research by KashFlow suggests UK small business is owed £440 billion in overdue invoices, which the company says is stifling business growth in the UK. A sample of thousands of businesses revealed the average UK business had £91,880 in overdue invoices in 2012, equivalent to £440 billion for the UK’s 4.8 million businesses.
In the face of the 2013 budget, KashFlow suggests problems with lending would be a smaller issue if bigger businesses were given more pressure to pay smaller suppliers on time. This would help small businesses better manage their cash flow and help to fuel growth in the record number of new businesses that could provide a sought-after boost to the exchequer.
KashFlow identified one of the issues with late payment being poor financial administration by time-poor small business owners. In response to this KashFlow:
Introduced an automated reminder service to its online accounting software last year.
Since launching the feature, KashFlow customers that use the feature are paid 33 per cent faster than those that don’t.
KashFlow also has the option to add a ‘Pay Now’ button to invoices, which directs to an existing merchant account with one of KashFlow’s Payment Processor partners, or through a GoCardless Direct Debit.
Duane Jackson, founder of KashFlow commented:
“We hear so much about banks being urged to lend more to small businesses but these figures show the first step on the path to growth is ensuring the businesses at the top of the food chain are paying on time. Small businesses often apply for loans to solve cash flow problems, so with the banks not lending, bigger businesses deliberately holding back on payments are stunting the growth of green shoots in the economy.”
“There is a snowball effect to late payment that inevitably hits those at the bottom of the supply chain the hardest. More often than not, these are the businesses most likely to be worst affected by late payment – especially given the continued struggle to borrow money from banks. As far as we are concerned, there should be a focus from the Government on encouraging big business, through whatever measures necessary, to not undermine the economy with difficult payment terms and tardy payment.”
“It’s not an option for big businesses to turn around and say, ‘it’s the banks’ fault, or it’s the suppliers’ fault’, we can see from our stats that even with reminders, businesses being supplied by SMEs routinely pay late – and it gets worse the bigger a company is. This is a virus that is killing off small businesses at a key point of growth, and the Government should at least recognise the scale of the problem.”