Britain’s hard working self-employed endure a loss of £8.1bn per year from abandoning late payments, according to new research from Paym, the UK’s mobile payments service.
Nearly 1 million sole traders have lost out financially this year, after being forced to give up chasing payment from a customer. This is a massive blow to cash flow reliant self-employed traders, who lose out on an average of £2,472 each per year. When combined across the UK’s 3.3 million sole traders, this figure balloons to £8.1bn per year.
The bad news for Britain’s plumbers, physios, caterers and other sole traders is compounded by the fact that it seems the trend for late payment to small businesses is on the increase. Three in ten (30%) sole traders have given up on a payment in 2016, compared to 23% of those surveyed in 2015. If this trend is repeated across all of the UK’s sole traders, it means 990,000 businesses have lost out on money this year, up 231,000 from last year.
The problem hits its peak in the South West, where 37% of sole traders find themselves giving up on money they are owed by customers. Self-employed traders in the West Midlands have a better relationship with their customers, with one in five (21%) saying they have resorted to abandoning the chase for late payments.
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There also appears to be an emerging trend for sole traders to accept mobile payments, capitalising on the rise in use of mobile banking apps by consumers*. Our survey found 66,000 small businesses now accept mobile payment services such as Paym, a figure which has doubled from last year.
Craig Tillotson, Executive Chairman of Paym, said:
“It is worrying to see that late payments are a growing problem for Britain’s sole traders. Chasing late payments eats up valuable time, so it’s understandable that an increasing amount choose to cut their losses. However, the chase for payment can be countered by offering customers alternative methods of payments. Paym is an easy alternative that works the same way as a normal bank transfer without the need to hand over a sort code and account number.
“Over 20 million potential customers can use Paym from their mobile banking app to send money using just a mobile number. So chances are that your customers would be able to conveniently pay you the exact amount via Paym more quickly than you can write an invoice. It’s fast, secure, simple, and can help end chasing payments.”
However, even when the customer is willing to pay up, sole traders are losing out with cash payments. Nearly a third (32%) of sole traders admit to rounding payments down for customers that don’t have the right amount of change on them and therefore end up out of pocket.
Paym makes it easy for small businesses to get paid straight into their bank account using just a mobile number. More than 20 million customers of 17 banks and building societies who use mobile banking can send payments straight from their app, with payments made at the same speed as payments sent using a sort code and account number (in most cases, almost immediately).
A further benefit of Paym is for added peace of mind, the customer is presented with the recipient’s business account name before confirming the payment. Small businesses can find out how to register to receive payments by visiting: http://www.paym.co.uk/paym-for-business/