In a poll carried out by YouGov on behalf of cloud accounting company FreeAgent, 13% of micro-business owners surveyed said they had to wait for at least a year before a client had settled an outstanding invoice – while 46% said that they had waited two months or more to get paid by a client.
The research, which surveyed more than 500 micro-business owners/sole traders and was carried out to mark FreeAgent’s £1m crowdfunding drive through Seedrs, found that 86% of micro-businesses that issue invoices said they had been paid late, while just 14% said they had never been paid late.
And the poll also suggested that some respondents did not view chasing late-paying clients as a matter of urgency. 31% of respondents said they wait for a month or more after their payment deadline has passed before chasing up an unpaid invoice, while only 28% said they would chase an invoice within the first week after it was due.
Ed Molyneux, CEO and co-founder of FreeAgent, said: “When you’re running a business it’s really important to get paid quickly – late-paying clients can create major cash flow problems which in extreme cases can lead to the failure of your business.
“But our research shows that many UK micro-business owners face real problems when it comes to getting paid on time. We also found that many micro-business owners are waiting for months before they chase an unpaid invoice, and that’s really too long.
“We know that it can be awkward to chase clients and ask them for money, but if you don’t follow up with late payers from the moment that their invoice is overdue, they may not see the urgency in paying you. And that means you may be stuck waiting for months – or in extreme cases even years – to get paid what you’re owed.
“So instead of worrying about having that awkward conversation with a client, make sure you chase your overdue invoices quickly. Either make chasing invoices a strategic part of your weekly accounting or invest in the right tools or software that will do it automatically for you. Otherwise you run the risk of missing out on what you’re owed and your business may suffer.”