The Practical Guide to Limited Company Tax
If you have chosen to operate your business as a limited com...
By Jonathan London on 17th June 2015
Micro-businesses are having their growth prospects severely undermined by the common and harmful problem of late payments.
A recent report from software firm Intuit QuickBooks, carried out by Opinion Matters, has indicated that Britain’s micro-businesses are currently owed £16.9 billion by their customers, with these organisations spending an average of 19 working days a year chasing invoices.
It was shown that 32 per cent of respondents said they have had to take on loans or credit to pay suppliers and wages when money was owed, which can be extremely disruptive to self-employed people who may not have a huge amount of capital to rely upon.
The government has already acknowledged that late payment of micro-businesses – which account for 96 per cent of all firms in the UK – is a major problem, prompting the announcement of the Enterprise Bill in the recent Queen’s Speech. Helping small businesses resolve payment disputes will be a key pillar of the legislation.
However, the Intuit report also indicated that in some cases, small business owners are not doing all they can to head off this problem (here’s some advice on what you should do). Many do not ask their customers to pay immediately, while only 36 per cent send invoices via email, with the reliance on traditional mail and paper invoices creating needless additional delays to payment.
Rich Preece, UK vice-president and managing director at Intuit, said: “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’ cashflow and save valuable time by making it easier for their customers to pay.”
This is one of a number of issues that the government is being called upon to address to make trading conditions more favourable for micro-businesses.
Earlier this month, the Federation of Small Businesses raised concerns that not enough is being done to help smaller firms protect their intellectual property rights – infringements of which can be extremely damaging.
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