So called micro-businesses, firms with ten or less employees, could be missing out on £11.4bn a year in unbilled hours, cloud accounting company FreeAgent has warned.
Research from FreeAgent estimates that small businesses could be missing out on £218m a week leaving them facing the prospect of being both underpaid and undervalued.
FreeAgent’s research found that almost two in three (63%) business owners fail to track or record any of their time and just 8% track their time at all.
Additionally for every hour billed by micro businesses, they will on average work an additional 30 minutes of time that they could – but don’t – bill their clients for.
The research carried out by YouGov for FreeAgent – which provides a cloud accounting system for freelancers and micro-businesses – also showed that a third (34%) of respondents claim to have felt overwhelmed by their business accounting, which includes financial reporting, invoicing and payroll.
Ed Molyneux, CEO and cofounder of FreeAgent, said: “The UK’s small and micro-business sector is the lifeblood of our economy and needs all the support it can get. At times it can be a struggle to survive and our research reveals the extent to which these businesses are going the extra mile often without being paid.
“From our own internal data, we’ve discovered that for every hour a micro-business works and bills their clients for, they will on average work an additional 30 minutes that they could – but don’t – charge for. That’s a third of a typical micro-business owner’s time where they’re essentially working for free – which UK-wide adds up to hundreds of millions of pounds worth of lost earnings.
In addition, YouGov’s research, which surveyed more than 500 micro-business owners and was carried out to mark FreeAgent’s £1m crowdfunding drive through Seedrs, revealed that almost a quarter (23%) of micro-business owners personally spend more than one full working day every month on their business accounting while nearly one in ten (8%) spend at least three full working days on them.
FreeAgent believes that this extra time equates to around 2.4 million unnecessary days spent on accounting per month across the whole of the UK’s micro-business sector.
Molyneux added: “The reality is that, although many micro-business owners work hard for their clients, they also spend long hours doing business-related tasks that they don’t get paid for – and that includes managing, and sometimes feeling overwhelmed by, their accounts.”