Industry News
January 11, 2022
7 mins

Chasing Bad Debt Costs UK Businesses Over £6 million every year

Zara Farr
Digital Accountant

It feels like an inevitability of business that you’ll forever be chasing bad debtors. Either your customer or client runs into cashflow difficulties, they simply don’t want to pay up, or simply forget.

Whatever the client’s reason is for no payment, you’re given flimsy excuse after flimsy excuse until you take legal action or let the debt go.

While an awkward and unappealing task chasing bad debt is important for your business, or so you are told?

Hear us out 👇

Over £6million is lost every year through bad debt chasing

In a recent survey we spoke to 500 business owners and 70% of businesses are losing on average 3 days per month chasing bad debt. Although many want to chase the debt, the time and cost begins to add up with a month per year on average lost.

Consider the daily salary of the average business owner, and that equates to more than £6million. For each business, that equates to a £6,750 loss every year. Those three days a month don’t seem so worthwhile now, do they?

So, what’s the solution? You can’t keep spending money trying to claim the money, but you can’t really, and shouldn’t, let bad debtors off the hook.

How to save money and still claim bad debt

There are three simple things you can set up once that will save you time chasing bad debts in the long run and increase the chances of clients and customers paying you on time.

See our helpful and cost-efficient list of solutions below,

Set up accounting software

The first thing we would recommend is setting up accounting software. Just over 15% of UK businesses we spoke to haven’t done this, which means you’ll be spending a lot more time than necessary gathering together all the information you need to file a tax return, forecast cashflow, manage business budgets and more.

Utilise bank feeds

Secondly, make sure that your bank feeds are directly linked to your accounting software. Manually adding this information in yourself, even if you’re copying and pasting, wastes precious minutes, and as you can see from above, every minute counts in business. It sounds simple, but our survey revealed that more than half of companies don’t do this.

Use accounting apps to speed things up

Thirdly, consider linking accounting apps to your software; we highly recommend Xero as there are plenty of ways to automate invoice chasing.

Focusing on Xero, you can set up personalised and automated invoice payment reminder emails that are automatically sent to late payers, meaning you don’t even have to think about it, let alone spend time chasing yourself.

The app can also send out emails in the weeks leading to an invoice payment deadline, increasing your chances of being paid on time. And because it’s linked to your accounting software, everything is automatically updated for you when a payment is made.

These are straightforward steps that would save your business thousands of pounds every year. Money that could be invested straight back into your company.

Gravitate Accounting works with businesses to take on the strain of financial accounting so that you can focus on your business. Why not get in touch to see how we can help you save money and meet your business financial goals in the long run?

Zara Farr

Subscribe to Gravitate

Get industry insights that you won't delete, straight in your inbox.
We use contact information you provide to us to contact you about our relevant content, products, and services. You may unsubscribe from these communications at any time.

More news

Allowable expenses that you can easily claim through your business and help save on tax

Find out about the type of expenses you're able to put through a limited company.

Read Article

7 Reasons we love Pleo Bills and how it makes processing payment runs easier

Payment runs are a thankless task and can often be very time consuming, getting together the invoices, processing them and getting approval

Read Article

32 Ways to Get the Maximum Value out of your Business

A question I get asked all the time is: ‘What can I take out of my business?’ and ‘how do I save more tax?

Read Article

Gravitating Towards The Future

Discover how Mike and Sam from Gravitate Accounting plan to tax their business efficiently in order to build a bright future for themselves,

Read Article

Do you know your real-life number

Every business owner has a real-life number. It is everything behind the scenes, that you are working towards in your real life, things like

Read Article

You’re not getting the tax advice you need

There’s an unspoken truth when it comes to tax advice: for business owners, there’s a complete lack of transparency from advisors over what

Read Article

Tax Implications for Crypto Currency

Holders of cryptoassets need to be aware of the tax implications, whether they are trading or mining.

Read Article

Inheritance Tax Planning

As inheritance tax take increases by a third, it is time to think about more efficient wealth and tax planning.

Read Article

Find out how the Autumn Budget 2021 announces will impact your business

Last week, the Chancellor of the Exchequer – Rishi Sunak – announced a wave of tax reforms...

Read Article