Late payments threaten thousands of small firms

The issue of late payments has becoming a significant problem and is putting the future of thousands of small businesses at risk, according to a survey carried out by the Federation of Small Businesses (FSB).

The study of more than 1,200 business owners found that one in three businesses (30%) have seen late payment of invoices increase over the last three months, with a further 8% experiencing other forms of poor payment practice.

As a result, nearly one in ten (8%) say late payment is now threatening the viability of their business.

Latest government statistics show that there are an estimated 5.5 million small businesses in the UK – a figure which fell by 400,000 over last year’s lockdowns. The new FSB study suggests that a similar number of firms (440,000) could be forced to close again this year due to late payment alone.

Most small businesses (78%) say costs are rising. The figure is at a seven-year high.

FSB National Chairman Mike Cherry said: “Small firms are facing flashpoint after flashpoint. On top of that, operating costs are surging – many will soon be trying to strike energy deals without the clout of big corporates or the protections afforded to consumers.

“Late Payment was destroying thousands of small businesses even before the pandemic hit – the pandemic has made matters worse.

“Every big UK corporation should have a non-executive director on its board with direct responsibility for payment culture. And every big business and government organisation should be abiding by the prompt payment code: 30-day payment terms are not a ‘nice to have’, they’re the norm for those who are committed to environmental, social and governance best practice.”

Please contact us if you would like help with debt collection and credit control.