- New data from a sample of FreeAgent’s 45,000+ customers reveals that typical UK micro-businesses write off an average of £1,804 in unpaid invoices per year.
- With five million micro-businesses in the UK this equates to a total of over £9 billion written off in unpaid invoices last year
- These unpaid invoices also suggest that the Treasury could be missing out on an estimated £800m in sales tax each year
- This year’s May Day, the 130th anniversary of the ‘Haymarket Affair’, considered a key event in creation of International Worker’s Day
With May Day (01/05/16) being the traditional celebration of workers’ rights for pay and conditions, new research from cloud accounting software provider FreeAgent highlights the immense difficulties the self-employed and micro-businesses in the UK have in getting paid.
Data based off FreeAgent’s customer base of more than 45,000 freelancers, contractors and micro-businesses reveals:
- Based on invoices dated between 1st April 2014 and 31st March 2015, FreeAgent found that freelancers and micro-business owners were on average forced to write off £1,804 from unpaid invoices per year.
- With a total of 5 million micro-businesses (businesses with 0-9 employees) in Britain and £1,804 being written off per business, this results in a total of £9,020,000,000 (£9 billion) in invoices being written off per year.
- Based on these unpaid invoices, FreeAgent estimates that an additional £800m sales tax could be lost to the Treasury each year.
May Day in 2016 – Rise of Freelancers In The UK
This year’s May Day also coincides with the 130th anniversary of the ‘Haymarket Affair’, considered a key event in creation of May Day as a celebration day for workers around the world.
However, more and more workers have now moved away from traditional employment as celebrated on 1st May and the UK now boasts 1.8 million freelancers. Not only this, more than 440,000 people have joined the freelance ranks since 2011, and digital freelancers are likely to earn a median income of £43,000, far above the full-time average salary of £27,600.
Ed Molyneux, CEO and co-founder of FreeAgent, who provide award-winning online accounting software to freelancers and micro-businesses, said:
“With the UK home to an estimated 5 million micro-businesses – including 1.8 million freelancers – there’s no longer a ‘typical’ type of worker. Instead, many have chosen to start their own businesses despite not having the traditional protections in place which May Day traditionally seeks to represent.
“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.
“Across the whole of the UK’s micro-business sector, we estimate that around £9 billion is being written off every year. And 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.
“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.”