This means that 2.2 million people in the UK may not have been paid on time.
What is causing cash flow problems?
Statistics from the BACS payment scheme show that late payments have a direct cost to SMEs of £2 billion. Off the back of this year’s Spring Statement, the government has committed to the introduction of payment practice reporting in which large companies will have to review and report on how they’re paying suppliers in their annual accounts.
Debt and money management struggles
Over a third (38%) of those who’ve had cash flow issues have been unable to pay their debts. QuickBooks’ research also found that small businesses have an average of £31,055 in debt owed to them.
Perhaps this is down to how they handle their finances. Over half (54%) of UK small business owners run manual calculations in programs like Excel to track business bill payments, leaving them at risk of losing important information like expenses. Making Tax Digital is fast approaching and it’s the ideal opportunity to update to your software.
Self-employed people suffer the most
Self-employed workers are 2.5 times more likely than SMEs with up to 49 employees to have cash flow issues on multiple occasions. They’re also three times more likely than any other group to have applied for a loan.
Chris Evans, VP and county manager at Intuit QuickBooks, said: “It’s time to realise digitisation in the back office is not just a nice to have, but essential to the prosperity of any company.
“With features like automatically nudging clients to pay invoices, digital accounting can help tackle bad payment practices, reducing the time to get paid and free up time for business owners to invest in themselves or their business.”
Analysis shows that raising an invoice on mobile gets people paid after an average of eight days instead of 28. Digital bookkeeping ensures that every time an employee gets paid, an invoice is sent or a customer makes a payment, the info is tracked and updated.
More on cash flow