Yahoo Finance UK businesses lose £37bn a year through poor spending controls
UK businesses lose around £37bn ($51.2bn) a year through poor business spending controls — more than 10% of the total losses across Europe.
That's according to a new study by European pay and spend automation platform Soldo, which found that European businesses lose £301bn a year.
Germany — Europe's biggest economy — was the worst hit, losing around £54bn a year, while France and Italy also reported sizeable figures, £37bn and £26bn, respectively.
Against a backdrop of low productivity and the economic impact of the pandemic, this concerning figure is equivalent to 2% of revenues for every business in the UK – with losses starting at around £50,000 for small businesses, rising to around £12m for the biggest UK firms.
“Although many businesses in the UK are struggling to manage cashflows in this exceptionally challenging economic landscape, we see that many are losing significant revenues on an annual basis simply through poor management of spending,” said Carlo Gualandri, CEO of Soldo.
“Looking at this loss of revenue at a macro-level, the numbers are quite staggering.”
The study highlights how poor visibility, over-spending and duplication of spend are the biggest contributing factors to limiting organisational growth.
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The research also reveals that over £19bn is lost each year in unclaimed VAT across the UK, of which around £3.8bn is lost due to errors in the way receipts are processed.
In the face of extraordinarily challenging trading environments, it is remarkable to see companies not claiming back money that is rightfully theirs which could be reinvested into company growth.
“Finance functions need to transform to drive business results, too much time and revenue is being wasted because of inefficient practices that are holding finance teams back. After all, it is these teams who are ideally placed to provide the strategic insight that will enable the company to thrive (or survive), in the wake of Covid,” said Gualandri.
UK businesses are losing out due to inadequate spending controls, with only 14% deeming current measures “very effective.” The challenges span multiple areas, with finance teams reporting over-centralisation causing slowdowns, excessive paperwork and poor visibility on spending.
The impact of these inefficiencies is stark. The Soldo report demonstrates that inefficiencies within spending processes are damaging organisations. Four in 10 of UK businesses say that bad financial practices have led to unnecessary spending, and 29% report the duplication of costs.
Effective time management is also something that UK finance teams are struggling with; Soldo’s research shows that senior UK finance staff lose over 350,000 hours each week performing unnecessary admin tasks – worked out to a staggering 15.4 million hours being wasted each year.
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