UK small businesses are failing to invoice for billions of £
Failing to invoice, we all do it but there could be lost income of around £3.7bn each year through forgotten invoices, a new study has found.
Britain’s small businesses are failing to invoice and so losing out on billions in revenue every year because of forgotten invoices, according to a new survey of 450 SMEs commissioned by business and finance software provider Exact.
It found that 20pc of the SMEs surveyed were failing to invoice for goods or services at least once. Among these, around 12pc said the work was worth between £5,000 and £10,000, while 6pc have forgotten to invoice for a job worth more than £10,000.
“We don’t want to blow this issue out of proportion,” said Hartmut Wagner, managing director of Exact, “but these findings do highlight that many SMEs who are eager to grow are not doing themselves any favours, particularly with so many of them expressing concern over their cash-flow.”
What is my view on these findings?
Well I am not surprised to hear that SMEs are “forgetting” to invoice for goods and services. There may be several reasons including poor internal controls, which begs the question: “why did the auditors not pick it up?”
I believe the answer lies in the fact of fewer audits are undertaken since the thresholds were increased many years ago. The checking of completeness of income is one of the basic audit tests. If the internal control systems are weak then the auditor should comment on the fact and would be then be bound to carry out more testing where these omissions would come to light.
The alternative, and less costly way to reduce the risk of non-invoicing for goods and services, is the Accountants Review where specific systems can be examined in depth. Again a full audit does not need to be carried out to establish the integrity of the order and sales systems.
I would recommend businesses to review the order/sales cycle to ensure they are satisfied about the completeness of income, particularly if they are looking to sell their businesses. Based upon the figures in the survey, it is a bit of a no-brainer to have someone who is independent review the system. It is not a huge exercise, it is not too costly and the upside seems high.”
So, if you would like a review then please contact me on 07860 898452 or by email: email@example.com
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