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The costs of mishandled credit control and accounts receivables

The costs of mishandled credit control and accounts receivables

Your accounts receivable process could be costing you as much as £100,000 per year. 

For many small businesses, credit control is not the focus of their business and is often handled in an inconsistent and reactive manner.

In this article, we’ll be looking at what the costs are of mishandling your credit control and accounts receivables process and how Chaser can help.

The cost of mishandled accounts receivables

There is a huge range of negative consequences associated with not conducting effective credit control and some of the most common are:

Inconsistent cash flow

Cashflow is often cited as the largest business challenge facing small and medium enterprises (SMEs) in today’s market. This isn’t surprising given that UK SME late payment debt has risen to a colossal £23.4 billion. That amount is nearly double the £13 billion owed in 2018.

On average, each UK SME is owed more than £63,881 and 52 per cent of all invoices sent by small businesses are paid late.

The negative consequences of inconsistent cash flow are clear. Around 50,000 businesses every year are forced into insolvency by insufficient cash flow. Additionally, 13 percent of SMEs have struggled to pay their business debts, 12 per cent have struggled to pay their staff on time, and 10 per cent have been forced to use invoice financing, impacting their credit rating.

Wasted time

In an effort to rectify the cash flow problems caused by late payments, small businesses are wasting time and money to recover funds they’ve already invested time and money in earning.

They are paying to get paid.

According to the digital banking platform Tide, the average UK SME is wasting 30 percent of their time pursuing around five outstanding invoices at any given point. 

According to the digital banking platform Tide, the average UK SME is wasting 30 percent of their time pursuing around five outstanding invoices at any given point. 

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Around 22 per cent of those waiting to be paid are spending £500 per month chasing payment. In total, the costs of chasing unpaid invoices each year equates to £6.3 billion.

Chasing unpaid invoices is also a draining and repetitive process which demoralizes staff and takes trained professionals away from efforts to grow the business.

Impacted customer relationships

Maintaining a good customer relationship is crucial to the repeat business which is vital to the survival of most SMEs. 

However, most SMEs are not credit control experts, which means that their attempts to recover the money they are owed can have a negative impact on their business relationships.

Increased ‘bad debt’

Improperly handed credit control can result in increased ‘bad debt’, debt that is considered unrecoverable and therefore written off. This issue is further compounded by the lack of effective debt recovered solutions offered to smaller businesses.

Most businesses associate debt collection, one of the few solutions for bad debt, with aggressive collection tactics and customer harassment. Instead of jeopardising their customer relationships with these outdated methods, most SME owners would rather write that debt off.

Missed opportunities for growth

The reality is that cash flow is the catalyst for growth and it can be almost impossible for a business to seize opportunities when all its funds are tied up in unpaid receivables.

A recent study of more than 500 small businesses found that 30 per cent would use the currently being wasted on chasing payments to improve business processes, marketing the businesses and connecting with new clients and customers.

Increased stress

The personal impact of poor cash flow cannot be overstated. Around 75 per cent of UK business owners struggle with sleepless nights due to unpaid invoices and 22 per cent start chasing invoices as soon as they wake up.

Around 56 per cent of all time spent chasing for payments occurs outside of the working day which eats into personal downtime and increases stress. Only 15 percent of small business owners feel that they get to spend enough time with friends and family.

Only 15 percent of small business owners feel that they get to spend enough time with friends and family.

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The compounded stresses of running a business and chasing unpaid invoices have resulted in 26 per cent of SME owners indicating that their physical and mental health has suffered because of late payments.

How Chaser can help you improve your accounts receivables 

So far, Chaser has helped our clients recover an average of 80 per cent of their outstanding invoices. Using Chaser lets the average business save 15 hours per week on credit control, experience a 16-day reduction in debtor days, and enjoy a $22,000 boost in cash flow for every $500,000 of turnover.

We offer a variety of flexible and innovative credit control solutions that can revolutionise the way you and your business approach your accounts receivable, including:

A fully automated (and personalised) system

By automating your credit control through the Chaser app, you can reduce both the cost and time spent chasing unpaid invoices.

Our system allows you to fully customize your automated reminders to reflect your unique tone and the relationship between you and specific customers. All reminders appear to some from your personal email address and can be scheduled to send at specific times.

Credit control outsourcing options

For the low starting price of £310+VAT per month, far less than the average £22,000-£30,000 a year spent on an in-house credit controller, you can add Chaser’s credit control services to your team.

We act as an extension of your business, adopting your tone of voice and best practices while giving you access to professional credit control services without the need to hire new staff.

Please click here to read why (and when) you should consider outsourcing your credit control. 

Innovative debt collection services

Instead of relying on aggressive outdated tactics that can harm your business’s relationships with its customers, we act as mediators, working to find the best solution for all parties.

Delinquent invoices can be escalated to our Collections Team through the Chaser app in just a few clicks and our pricing is transparent and upfront.


If you’re struggling to implement effective credit control and suffer the fallout of stagnated cash flow, contact Chaser today to find out how we can help.

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