Small businesses waste five weeks a year chasing arrears

90% of them have clients that fail to pay on time.

Small businesses spend an average 25 days each year, or 5 workweeks, chasing arrears, causing major productivity drains, accounting software provider Xero revealed.

According to its research, nine out of 10 have clients who do not pay on time.

As a result, 59% of small businesses face a backlog of work, 46% have reduced productivity, 38% get cash flow issues, and 31% dampen morale. A quarter of respondents also struggle to pay staff.

The research also revealed 12% of small businesses experience late payment from at least half of their clients, whilst more than half or 52% businesses experience late payment from at least a fifth of their clients.

About 53% have to wait at least 11 days after the due date to be paid, and almost a third at 31% have to wait an entire month longer for payment than contractually agreed.

Key reasons for customers paying late include waiting on a late payment from another supplier and having financial problems. Meanwhile, 21% of respondents saw their own outdated accounting technology as the problem.