From understanding expenses to starting a limited company, our downloadable business guides can help you.
Small businesses are losing billions of pounds a year as a result of writing off unpaid or uncollectible debts, according to new research.
Figures from insurer Direct Line for Business show that the smallest UK companies wrote off almost £6 billion in the 2015-16 financial year – and the typical amount lost by the firms affected was £31,000.
Late or unpaid invoices are one of the biggest threats to the survival of small firms. But the study found that more than eight in every 10 businesses are currently owed money by their customers. On average, companies have just under £63,000 in unpaid invoices.
One in five enterprises surveyed said that they had been forced to write off debts last year. The most common reason (cited by 29% of respondents), was that a customer had gone bust, and in 17% of cases, the business said it didn’t think the supplier would have enough money to pay its bill.
Meanwhile, 10% of firms said they did not have sufficient time to chase up the debt in question, while 10% also said they were afraid of damaging their relationship with their debtor by demanding payment.
Nick Breton at Direct Line for Business said:
With more than a million SMEs based across the UK, these enterprises really do make up the backbone of the British economy. However, it is alarming to see just how much hard work goes unrewarded, especially when considering that many SMEs appear reluctant to chase debts, with reasons ranging from thinking that the client may not be able to afford the cost to damaging their relationship.
Among those firms who had written off debts last year, 40% admitted they did not know exactly how much money they were currently owed.
Direct Line said that companies should check the reputation of any businesses they were considering extending credit to, and try if possible only to work with firms that they have full confidence in.
Adam Home of Crunch Collections – our specialist debt collection agency for the self-employed – commented:
These figures show the significant financial cost of poor credit control. Many of these companies could have avoided the stress and inconvenience associated with a bad debt by simply taking ten minutes find out who their prospective client was and whether they were likely to pay on time.
A credit report on your clients will give your company all the information it needs to identify the risk and balance the potential rewards. If you don’t regularly credit check your new and existing clients, you’re doing business in the dark and increasing the risk of incurring a potentially crippling bad debt.
You've pitched, landed the job, delivered your work...and now it's time to get your money. But how do you do that? Luckily, help is at hand! We give you the lowdown on what your invoice should include as well as links to handy free templates and software.
Payment on account is not something that is widely known about among people who have never been part of the Self Assessment system. Learn more now!