A new report has confirmed the shocking impact that unpaid B2B debts have on the UK economy.
A survey of SMEs by Amicus Commercial Finance found that the average small business in the UK writes off a staggering £12,000 each year in unpaid invoices, mainly from larger customers and clients.
Taken across the entire economy, that adds up to an unbelievable £50bn a year in lost revenue - or £134 million lost to bad debt every single day.
Three quarters of the businesses surveyed said they had written off debts entirely in the past year. Amongst the worst affected group, businesses with 50 to 249 employees, a quarter of all invoices are not being paid on time, if at all.
London based start-up Crowdmix Ltd was in the process of developing a social media music platform. But before it could even launch its product fully, it ran out of money despite having previously raised £14 million in funding.
As of Monday 11 July, 2016, it has left its creditors, many of them freelance contractors, tens if not hundreds of thousands of pounds out of pocket. If you’re owed money by Crowdmix the prognosis for recovery is not good, so let’s look at what happens next.
The UK's small businesses are facing even longer overdue invoices than at the worst point of the recession, according to figures from ABFA.
In a report published earlier this month, the Asset Based Finance Association revealed that, in 2009 when the recession peaked, firms with turnover of less than £1 million per year were waiting on average 61 days for invoices to be paid.
The smallest firms in the UK are being paid late, in some cases by over a year, due to a lack of urgency and a sense of awkwardness about chasing clients for payment, new figures suggest.
A survey carried out by online accounts software provider FreeAgent revealed that just one in seven micro-businesses that issue invoices have never had to deal with an instance of late payment.
“A sale is not a sale until the money is in the bank”
A simple sentiment, but one that can often be lost in the thrill of securing that next big sale. But when the agreed upon payment day passes and you have no sign of the promised payment, what is the best way to go about securing the funds?
We have previously covered how unpaid invoice spammers target credit control failures using an archaic .arj file to spread malicious software, but a new and considerably more dangerous threat has just started to land in inboxes throughout the UK and across the globe.
This latests threat is more insidious as it uses a well known file format to deliver a malicious payload specifically designed to steal sensitive financial data from users.
Unless you have the luxury of an in-house credit controller - which is something even some larger firms can't afford - you might be tempted to take a head-in-the-sand approach to chasing overdue invoices, and simply try to pretend they never happen.
Sadly they do happen, even from trusted long-term customers, and that can lead in turn to some soul-searching: Why didn't they pay? Did I do something wrong? Is there no trust in business any more?
The Experian Late Payment Index published on Monday shows again that the bigger a company is, the later it is likely to pay its suppliers, making for a timely reminder of the true nature of 'brand power' and its potential negative impact on small companies' cash flow.
In the third quarter of 2013, the smallest firms, with just one or two employees, paid an average of 20.62 days beyond agreed terms on overdue invoices - the smallest delay among UK companies of all sizes, and a slight improvement from 20.78 days in the previous quarter.
It's good to know that, when a dodgy dealer makes off with client money and there's no record of where it's gone, they will face prosecution to the fullest extent of the law.
New figures from the Department of Business, Innovation and Skills show that the BIS Criminal Enforcement Team achieved 198 successful prosecutions in the 2012-13 financial year.
Late payment of invoices is now - for the first time in recent years - the single greatest risk to creditors, even outranking debtor insolvency in a report from credit risk insurer Coface UK.
According to the insurer, 60% of the claims it received in the first nine months of 2013 arose due to "a customer's protracted default" - that is, either late or non-payment.