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
Linkedin

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

The Benefits of Hiring a Modern Finance Director 

As a business owner, you know that having the right people on your team is essential.

Read Article

How can a company secreterial service help me and my company?

As a business owner, you know that there is always something to do.

Read Article

How to run a sucessful finance function

As a small business owner, you know how important it is to have a finance function that is fit for purpose.

Read Article

Is my business ready for exit / sale? Do I need an exit strategy?

Selling a business is an exciting time, but it’s also one of the most complex and challenging processes that many small and medium-sized

Read Article

Making tax digital for income tax

If you’re an SME owner, you may have heard about Making Tax Digital (MTD) and wondered what it means for your business.

Read Article

Digitise Your Finance Function and Unlock New Opportunities 

Is your finance function still stuck in the dark ages? Do you find yourself drowning in paperwork and manual processes?

Read Article

Why is Sheffield being recognised as a top city to start a business?

Sheffield is one of the best places to start a business in the UK.

Read Article

What are the benefits of using Xero?

Running a business can be demanding, and keeping up with the finances is no exception.

Read Article