Unpaid invoices costing UK's smallest firms £9bn a year
12th May 2016 | News
Every year, freelancers and micro businesses are being forced to write off an average of £1,804 from unpaid invoices, according to new data from software firm, FreeAgent.
Based on analysis of its customer base of more than 45,000 freelancers, contractors and start-up owners, FreeAgent says that as much as £9 billion in unpaid invoices is being written off annually when averaged out across the UK’s five million micro firms.
These unpaid invoices mean an additional £800m in sales tax could be lost to the Treasury every year.
Ed Molyneux, CEO, FreeAgent, said: “With the UK home to an estimated five million micro-businesses – including 1.8 million freelancers – there’s no longer a ‘typical’ type of worker.
“One of the biggest issues that these smaller businesses face is getting paid for the hard work that they do.
“They regularly have to deal with clients paying late, or not at all, and we’ve found the problem is so widespread that these businesses are writing off almost two thousand pounds in unpaid invoices in their accounts each year.”
However, Molyneux fears that the true extent of the problem could be even worse.
“While it’s possible that some business owners may be incorrectly writing off some of their invoices, there are likely to be many more who are still holding out hope for payment and have not yet written them off as bad debt,” added Molyneux.
“Therefore the actual amount of ‘lost’ money per year may be much greater.
“That’s not just bad news for people running their own businesses, who aren’t getting the money that they’ve worked hard for, but it’s also bad for the Government who we estimate are missing out on close to a billion pounds in tax revenue."
It’s an increasingly prevalent issue given that almost half-a-million people (440,000) have joined the UK’s freelance ranks since 2011.