The majority of UK small business owners are suffering from late payments which are negatively impacting their companies and own personal lives, research has found.
QR-code payment and invoicing app Tomato Pay has revealed that 84 per cent of small businesses suffer from late payments. One in eight (12 per cent) wait more than 60 days on average for an invoice to be paid, while two per cent have to wait more than 90 days.
92 per cent of small business owners said these late payments are having a negative impact on either their business, their personal life, or both. Over a third said it causes cashflow issues and stress, while 16 per cent reported that they end up receiving late payment charges themselves.
Because of their customers not paying on time, a third of small business owners are forced to pay themselves late, or not at all, and 17 per cent have to pay employees late.
The impact of late payments is limiting 25 per cent of small businesses’ ability to grow, while a fifth (20 per cent) said they are worried their business won’t survive because invoices are not being paid when they’re due.
To help discourage late payments, 54 per cent of small business owners said they would be happy to offer their customers discounts for paying on time or early and 69 per cent said they’d like an invoicing software solution that sends reminders to customers that payment is due.
However, while small business owners are frustrated by late payments, almost half said creating invoices feels like ‘the wrong use of their time’ and two-thirds said they wish they could spend less time on finances and more time running the business.
“On average, small businesses issue 122 invoices every month – that is a whole lot of admin,” said Nicholas Heller, founder and chief executive of Tomato Pay.
“Then, when you consider the fact so many are paid late – which causes stress, cashflow issues and jeopardises the business’ survival – it is clear to see why the process of creating and issuing invoices can be so frustrating for small business owners. They just want to get paid on time – that shouldn’t be too much to ask.
“Tomato pay has been designed to help mitigate all these issues by giving small business owners the ability to turn quotes directly into invoices, receive instant payments and offer discounts for those who pay early. It can also send reminders to customers that their invoice is due and can automatically create late payment charges for those who don’t pay on time.
“Small businesses are the backbone of our economy and our communities, with the majority of people wanting to support local businesses and sole traders over big brands. Tomato pay gives people the ability to support local businesses in an easy, cashless way, and small businesses the tools they need to not only survive but thrive.”