Thursday 9th, London, UK: The average small business is working 13 months for 12 months pay - as two days of every month are spent on financial admin such as chasing invoices and late payments.
New research from Sage revealed a "lost month" during which staff efforts are tied up in ensuring bills are delivered and paid on time - rather than advancing their business.
The data showed half (49%) of small business chief executive officers (CEOs) and chief operating officers (COOs) spend four hours every week dealing with payment issues.
It means affected companies could claw back thousands of pounds in revenue if they used recent advances in technology, such as e-invoicing, to streamline their processes.
The UK Government is currently reviewing responses to a public consultation on the roll-out of e-invoicing - a standardised technology designed to take business invoicing digital.
By allowing invoices to be automatically generated, the new system has the potential to reduce the burden of admin on thousands of small businesses, reducing incidents of late payments and improving their cash flow.
This follows the launch of HMRC's Making Tax Digital programmes (MTD for VAT, and the upcoming MTD for ITSA), digitising the tax system for VAT, Income Tax Self-Assessment and Corporation Tax for businesses - with the intention to make tax returns simpler and more efficient for everyone.
Former Manchester United footballer and entrepreneur Gary Neville, who owns 56 businesses, recently appeared as a guest investor on BBC One's Dragon's Den.
He explained why he believes advances in technology will be a game-changer for small businesses, including those he backed on the show, in the years ahead.
Gary said: "In the last 20 years I have set up eight businesses from scratch, and one mistake I have made is not having strong financial teams in the early stages.
"If your finance team is inexperienced or under-resourced, they end up bogged down with the nuts and bolts, like invoices - they haven't got any time to look at how to grow the company.
"It happens quite often in small businesses, especially start-ups, and is even more of a challenge in businesses which have tight margins.
"Everyone is talking at the minute about AI, and how that can be used to help remove barriers and help businesses run more smoothly.
"And if advances in technology like e-invoicing can also be used to cut down financial paperwork, that will effectively remove the blinkers for those teams and allow them to look left and right.
"Spending all your time on paperwork and admin as a business is like being a footballer who spends all their time in the gym and never kicks a football.
"You want to be out there on the pitch winning by growing the business, growing your revenue and looking after your partners and stakeholders.
"It can be hard for businesses to change, but digital is the way forward. I think we have to go digital with technology like e-invoicing, because we've moved past the days of paper invoices being left on someone's desk."
The e-invoicing consultation comes as a third (34%) of small businesses said they felt "excessive" bureaucracy was holding their industry back as they struggled to keep productivity high.
But many felt technology could hold the power to help them win that battle.
When asked what they felt would most improve productivity in their industry, almost half (44%) of businesses answered "investment in new technology".
Seven in 10 (71%) said advances in tech had already been transformative for their businesses.
And more than 60% (63%) said they believed AI tools would help solve their productivity issues in the future.
Kirsty Chaplin, Director of Flourish Accounting, said: "Financial admin is a major time drain for SMBs. I've seen clients spend two to three days every month chasing payments or correcting invoices - that's time they could be using to grow their business.
"E-invoicing could really help eliminate common delay tactics, like claims that an invoice wasn't received or logged. It speeds up approval and helps cash flow stay healthy. But there's a lack of awareness around tools like e-invoicing. If more businesses adopted them early, they'd be ahead of the curve."
Neal Watkins, EVP Accounting & HR Division at Sage said: "As government initiatives like Making Tax Digital continue to roll out and proposals for e-invoicing potentially move forward, small businesses have a real opportunity to save time and reduce admin.
"By staying informed and prepared, they can reinvest that time and money into growth. Sage is here to help SMBs and accountants navigate this shift and succeed in a digital-first economy."
About Sage
Sage exists to knock down barriers so everyone can thrive, starting with the millions of Small and Mid-Sized Businesses served by us, our partners and accountants. Customers trust our finance, HR and payroll software to make work and money flow. By digitising business processes and relationships with customers, suppliers, employees, banks and governments, our digital network connects SMBs, removing friction and delivering insights. Knocking down barriers also means we use our time, technology and experience to tackle digital inequality, economic inequality and the climate crisis.
