GoCardless’ study reveals businesses to lose £1 mn annually in failed payments

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A new study by UK FinTech GoCardless has revealed that enterprise businesses are at the risk of losing almost £1 million annually in failed payments with the mid-market companies making losses of around £200k+ and small businesses £6k.

The company’s Payment Success Index, launched today, analyses payment data from around 55,000 customers and 900 external businesses and highlights the savings that businesses can make through the adoption of payments intelligence technology.

Duncan Barrigan, Chief Product Officer, GoCardless, said, “Payment failures are widely accepted as an inevitability. We don’t believe this should be the case. They can seriously hurt a business – they are costly and can damage reputation and customer relationships. That’s why we developed Success+ to help our customers tackle the issue of failed payments and, as we know from these findings, help reduce the cost burden they cause.”

GoCardless also showed that businesses are spending thousands of pounds to recover failed payments, costing financial services (£140,400), IT (£136,800), business services (£103,200), health and wellbeing (£86,400), and utilities (£85,200) per annum. The company’s report also highlighted that businesses primarily collecting payments with digital wallets has the highest average failure rate at 12%. It also showed that payments received by credit/debit cards have a failure rate of 8.2% – 2.9 times more failures than a GoCardless merchant with higher failure rates being seen within B2C than B2B. Average businesses are expected to lose more than eight times more revenue in uncollected payments than the average subscription business.

Charlie Francis, Founder and Director at Equation Training, an online fitness coaching and personal training business using Success+, said, “When I was first starting out, I used to have to manually chase payments that failed. Now that I have Success+ in place, it means a process that used to take 2-3 hours a week now doesn’t take me any time at all. The whole process is more professional, and it’s easier for clients as well – we never have any issues getting people set up, and we never get complaints about the payment process.”

GoCardless is also launching its Success+ in the Single Euro Payments Area (SEPA), thus allowing customers processing payments in SEPA  to request early access to the payments intelligence tool for fighting the failed payments issue.