Last updated: 13 Jan 2025 10:00 Posted in:
The UK’s small and medium-sized businesses (SMBs) surveyed could be losing a staggering average of £742 every month from incorrect invoicing stemming from poor tracking of rechargeable expenses, research from bookkeeping automation platform Dext has found.
This means that the UK’s more than 5.5 million SMBs collectively see a £1.1bn monthly shortfall.
The newly-released data, which compiled survey responses from over 500 UK SMB leaders as well as 100 accountants and bookkeepers, revealed inadequate client invoicing and expense management systems are leaving SMBs without access to real-time, accurate financial information.
Dext’s report said: “This deficiency affects businesses’ ability to meet payment deadlines, with late payments from clients due to poor expense tracking costing SMBs up to an estimated £1.9bn a month.
“These delays in payment create a ripple effect, challenging cash flow for SMBS and their suppliers. The incorrect tracking of rechargeable expenses, such as travel and supplies, is further exacerbating the issue, costing the UK’s SMB community up to £1.1bn per month.”
It added: “With 69% of SMB leaders claiming untracked, misreported or delayed expenses results in limited visibility of their outstanding liabilities, the knock-on effect has been felt heavily by suppliers, who are dealing with delayed payments worth up to £1.4bn.
“These inefficiencies were also found to hold severe long-term implications with over two-thirds (68.6%) of SMBs stating expense mismanagement had an impact on their growth initiatives with employee (32%), supplier (29%) and client (23%) relationships most impacted.”
According to Dext’s research, accountants spend on average five hours per month fixing client reporting errors relating to expenses and supplier statements and over 3 in 5 (61%) mention SMEs are blindsided by expenses, which lead to cashflow issues. The findings align with the UK government’s stated intent to address late payment issues for SMBs on a broader scale, primarily through its Fair Payment Code.
Speaking on the new findings, Sabby Gill, CEO at Dext, says, “With SMBs forming over 99.9% of total businesses in the UK, it’s clear that expense mismanagement is a challenge for the entire economy. As the data reveals, we’re in a vicious and costly cycle of delayed invoices, late payments, and strained relationships, which is impacting stakeholders across the board.
“No matter their size, industry, or service, businesses must embrace digital tools and get smarter about their expenses, especially in the face of rising rates and tighter tax controls.
“For accountants, this represents both a challenge and an opportunity to guide small businesses in modernising their systems, ensuring accurate reporting and avoiding cash flow pitfalls. By leveraging digital solutions, SMBs can not only streamline financial processes, but also position themselves as reliable partners in the wider economic landscape, supporting growth and stability in 2025.”
The research was conducted by Censuswide, among a sample of 500 SME leaders and 100 Accountants/Bookkeepers (aged 18+) across the UK. The data was collected between 22.11.2024 - 27.11.2024. Censuswide abides by and employs members of the Market Research Society and follows the MRS code of conduct and ESOMAR principles. Censuswide is also a member of the British Polling Council.
“By leveraging digital solutions, SMBs can not only streamline financial processes, but also position themselves as reliable partners in the wider economic landscape, supporting growth and stability in 2025.”
Sabby Gill, CEO at Dext