One in five businesses unaware of costly fees to process payments

A SHOCKING one in five small business owners are unaware of how much money they lose each time they are paid for work.

A study of 250 small business owners found four in ten use a payment company to bill clients and customers, but many don’t realise how big a fee is taken from each transaction, resulting in them losing money.

More than a fifth of their payments also come in late – putting a strain on precious cashflow.

Just under one in ten payments are more than a month late, causing chaos for those attempting to balance the books.

Craig Tillotson, chief executive and co-founder of payments service Ordo, which commissioned the research, said: “It can seem like the easiest thing in the world to let someone else manage the money side of things.

“After all, most small businesses were set up with people who had a great idea for a product, or a particular passion – not by people who love financial wrangling.

“In these difficult times you wouldn’t just buy fuel for your van at the first petrol station you come across, or buy your stock without shopping around, so why would you hand over more of your hard-earned profit to your payments provider than you have to?”

The study also found businesses with ten or more employees are most likely to experience late payments, with bosses estimating 42 per cent of the payments they receive are late.

Three in ten owners say their business has been impacted at the bottom line – with 13 per cent having to take time away from the standard business and delaying projects in order to chase payments.

Another one in ten say late payments mean they are unable to replenish stock or equipment.

Delays in payment can also mean some businesses are unable to pay their suppliers (8 per cent), pay wages or building rent (6 per cent) on time.

What help is there for businesses?

THERE'S a wide range of support available to companies during the coronavirus crisis.

  • The government has offered to furlough workers through its Coronavirus Jobs Retention Scheme, paying up to 80 per cent of wages up to £2,500 a month
  • While self-employed workers can get up to 80 per cent of profits paid by the government for the next three months – again up to £2,500 a month
  • The Bounce Back loan schemeoffers loans of up to £50,000, with the first year interest-free
  • Under the Coronavirus Business Interruption Loan Scheme (CBILS), SMEs can get loans and overdrafts of up to £5million for up to six years and the government guarantees up to 80 per of these loans
  • The Coronavirus Large Business Interruption Loan Scheme (CLBILS) offers support to companies with a group turnover of more than £45million
  • Small firms can get grants of up to £10,000 to help with ongoing business costs
  • VAT payments and self-assessment tax returns can be deferred for three months
  • SMEs that cannot afford their tax bills can ask HMRC for a “time to pay” arrangement so any debt collection is suspended
  • And they can get up to two weeks’ sick pay – almost £200 per employee for up to 250 staff members – refunded by the government.
  • A 12-month business rates holiday has been introduced for many businesses

Small businesses owners estimate they spend more than two-and-a-half hours each week chasing overdue payments and almost four hours reconciling their accounts.

A further three-and-a-half hours is also taken up with invoicing clients or customers. This adds up to a huge total of nine hours and 54 minutes on accounts-based tasks.

For more than four in ten respondents managing accounts and payments is the worst part of owning a business.

And 45 per cent say they regularly have to work overtime to complete business admin or development.

The recent UK lockdown has added further strain, with 42 per cent reporting the financial aspect of their business has become more challenging to manage during lockdown.

Craig Tillotson, from Ordo, added: “Especially in these tricky times, every little helps. Saving money on processing payments is a no-brainer for small business owners, many of whom are doing all they can to stay afloat at the moment.

“It’s worth shopping around. New services like Ordo can not only save you money with your payments, but make it easier to stay on top of them by showing you in real time, who’s paid and who hasn’t. No more crawling through bank statements late into the night.”

You can find out more about ordo at www.ordopay.com/business.

It comes as the UK economy is thought to be the hardest hit in among the world’s developed countries by coronavirus.

Small businesses have also been warned to check they’ve got "the right" coronavirus loan or face paying "twice as much".

Meanwhile, British Airways, Greggs and Rolls-Royce are some of the firms that have taken a slice of the £15.6billion pot for emergency coronavirus loans.

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