7 May 2016 13:00
Unpaid invoices costing micro-firms £9 billion a year
Freelancers and micro-businesses are forced to write off an average of £1,804 from unpaid invoices every year.
The data comes from cloud accounting software provider FreeAgent and the findings are based on analysis of its customer base of more than 45,000 freelancers, contractors and micro-businesses. With five million micro-businesses in Britain and £1,804 being written off per business, FreeAgent says that £9 billion in invoices is being written off per year.
Based on these unpaid invoices, FreeAgent estimates that an additional £800m sales tax could be lost to the Treasury every year.
Ed Molyneux, CEO and co-founder of 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."
The extent of the problem could be even greater, said Molyneux.
"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. Therefore the actual amount of 'lost' money per year may be much greater."
He added: "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."More than 440,000 people have joined the freelance ranks since 2011.