Microbusinesses write off billions in late payments
UK sole traders and microbusinesses could be owed up to £2.5 billion each year by late-paying customers, according to new research from WorldPay, the UK leader in payments*. Even more alarmingly, most of this debt – around £2.4 billion per year – gets written off.
WorldPay’s survey of over 1,000 mobile tradespeople and microbusinesses in the UK reveals that 75% of respondents have had a late payment in the last 12 months. Individual consumers are the biggest culprits according to 60% of respondents, while only 17% think that large businesses are the worst offenders.
The research shows that late payments are a growing dilemma. Around four in 10 respondents said it’s worse than 12 months ago and nearly half (45%) have had cash flow issues as a result. Apart from concerns about their business’ financial health, many are worried about damaging client relationships (31%) and time wasted chasing payments.
However, the survey suggests a sense of apathy amongst these businesses. More than half of respondents (54%) think that late payment is just part of being a small business that you have to accept and 76% believe that no matter what they do there will always be people who pay late.
David Hobday, Managing Director WorldPay UK, comments, “Running a micro-business is hard enough without chasing hard-earned money too. Customers may think that they can get away with stalling payments, but microbusinesses don’t have to put up with it. Late payments have a huge impact on cash flow and a knock on effect for everyone.
“A product like WorldPay Zinc can help make late payments a thing of the past by allowing micro-businesses to take card payments on the spot. The system works using a compact Chip and PIN keypad which links to their smartphone or tablet. “
Although many tradespeople still prefer to be paid in cash, WorldPay’s research showed that consumers are carrying cash less often nowadays. Nearly three quarters of respondents (72%) agreed that their customers are less likely to have cash on them than 12 months ago.
Colin Willman, Chairman of FSB (Member Services) comments: “The evidence is clear that customers are often unable to make cash payments on the spot, meaning bills are left forgotten or unpaid. As a result, small businesses are being hit hard by late payments and they should not stand for this any longer. They are entitled to charge interest and complain. However, introducing automated payments is one way they can take action now and help themselves to maintain a healthy cash flow, and grow their business.”
WorldPay estimates that there are over 3 million tradespeople in the UK today, of which 60-70 per cent currently don’t take card payments.
This was posted in Bdaily's Members' News section by WorldPay .