News release: Pay the Piper
A shocking one in five small business owners is unaware of how much money they lose - each time they are paid for work.
A study of 250 small business owners found four in 10 use a payment company to bill clients and customers, but many don’t realise how big a fee is taken from each transaction, resulting in them losing money.
More than a fifth of their payments also come in LATE – putting a strain on precious cashflow.
Just under one in 10 payments are more than a month late, causing chaos for those attempting to balance the books.
Craig Tillotson, chief executive and co-founder of payments service Ordo, which commissioned the research, said: “It can seem like the easiest thing in the world to let someone else manage the money side of things.
“After all, most small businesses were set up with people who had a great idea for a product, or a particular passion – not by people who love financial wrangling.
“In these difficult times you wouldn’t just buy fuel for your van at the first petrol station you come across, or buy your stock without shopping around, so why would you hand over more of your hard-earned profit to the provider of your payment than you have to?.”
The study also found businesses with 10 or more employees are most likely to experience late payments, with bosses estimating 42 per cent of the payments they receive are late. Three in 10 owners say their business has been impacted at the bottom line – with 13 per cent having to take time away from the standard business and delaying projects in order to chase payments.
Another one in 10 say late payments mean they are unable to replenish stock or equipment. Delays in payment can also mean some businesses are unable to pay their suppliers (8 per cent), pay wages or building rent (6 per cent) on time.
Small businesses owners estimate they spend more than two-and-a-half hours each week chasing overdue payments and almost four hours reconciling their accounts. A further three-and-a-half-hour is also taken up with invoicing clients or customers. This adds up to a huge total of nine hours and 54 minutes on accounts-based tasks.
For more than four in 10 respondents managing accounts and payments is the worst part of owning a business. And 45 per cent say they regularly have to work overtime to complete business admin or development.
The recent UK lockdown has added further strain, with 42 per cent reporting the financial aspect of their business has become more challenging to manage during the lockdown.
Craig Tillotson, from Ordo, added: “Especially in these tricky times, every little helps. Saving money on processing payments is a no-brainer for small business owners, many of whom are doing all they can to stay afloat at the moment.
“It’s worth shopping around. New services like Ordo can not only save you money with your payments but make it easier to stay on top of them by showing you in real-time, who’s paid and who hasn’t. No more crawling through bank statements late into the night.”
