Late payments are threatening the survival of small businesses across the UK, according to findings from new QR-code payment and invoicing app, tomato pay. Its poll showed that 84% of small businesses suffer from late payments. One in eight (12%) wait more than 60 days on average for an invoice to be paid, while one in 50 (2%) have to wait more than 90 days.
For one in four (25%) small businesses, the impact of late payments is limiting their businesses’ ability to grow, while one in five (20%) say they are worried their business won’t survive purely because invoices are not being paid when they’re due.
As a result of their customers not paying on time, 33% of small business owners are forced to pay themselves late, or not at all, while 17% have to pay employees late.
tomato pay’s research also found that while small business owners are frustrated by late payments, they also begrudge how much time they spend on creating invoices in the first place. Almost half say creating invoices feels like ‘the wrong use of their time’, with two thirds saying they wish they could spend less time on finances and more time running the business.
The majority (59%) say that if they could turn quotes directly into invoices it would save them time, rising to 72% for medium sized firms, while more than half (55%) think they’d be able to grow faster if they spent less time on the financial side of the business.
As part of its mission to support small businesses manage their finances, tomato pay, together with MarketFinance and untied, is currently bidding for Pool F of the Banking Competition Remedies (BCR) Capability and Innovation Fund. The fund was set up to distribute grants worth £12.5m to improve the financial products and services available to small businesses in the UK, as they deal with the impacts of COVID-19 and Brexit.
The three companies are proposing ‘Growth’, an end-to-end embedded financing solution for small businesses, automating everything from quotes to tax. In addition, the product offers an intelligent repayments feature that automatically deducts lending repayments from invoice payments. It aims to support £600m in lending by the end of 2022 to allow small businesses to grow.