11 Jan Small Businesses need to act now on late payment say Debt Collection Experts
The UK’s Small Business community is under serious threat and must act quickly according to Industry Experts.
It is being reported that 440,000 Small Businesses in the UK are under current threat from a tsunami of late business payments.
The Federation of Small Businesses (FSB) has made calls for immediate government support to Small Business and improve payment times. This request has been echoed by leading Business Debt Recovery Agency Federal Management.
The FSB’s recent survey hgighlighted that 30% of Small Business have seen a stark increase in the delayed paymen tof invoices over the last few months. A shocking 8% of those SME’s have advised that the problem is becoming so bad, it is threatening their very existence.
Small Business late payment in nothing new in the UK. But what is new has the ripple effect on the economy that the pandemic has caused over the past 20 months.
Unpaid invoices has always been a hidden problem for small businesses but the effects of it can be huge. Small Businesses are often forced to pay their suppliers well before they get paid. There have been many instances reported where small business owners are going without even gettting paid themselves such is the worsening situation.
Very often, whilst late payment is a bad enough problem. There is also the issue of Small Businesses not getting paid at all. There has been instances of large companies not paying smaller suppliers in the hope that they do nt have to in the event of the supplier going into liquidation or ceasing trading. This culture of ruthless enterprising has fuelled the collapse of many SME’s in the UK over the past decade.
FSB National Chair Mike Cherry commented “Late payment was destroying small businesses even before the pandemic hit. The pandemic has make matters worse”
“In the past the government has rightly identified greater board accountability as key to spurring change in this area but delivery has been slow”
‘Taking positive action’
Chris Spencer of leading Debt Collection firm Federal Management commented “Small Businesses need to understand that they have to become pro-active when faced with unpaid invoices. Every day we speak to Small Business owners who procrastinate when faced with non-paying customers”
“To achieve a positive result, you have to take positive action. We specialise in delivering Professional Debt Recovery for Small Businesses. It is an absolute no brainer that if a small business is facing financial worries due to no payment then they should take action immediately. No Small Business has ever lost a customer simply due to them requiring to be paid”
FSB National chair Mike Cherry also said that SME’s and Small Businesses are facing increased battles from all angles. The UK’s Small Business sector employs over 13m million people. Rising energy costs, new import checks and rising non-payment are just some of the day to day battles SME’s are facing in the UK.
Government late payment action
Previously, the government has tried to implement the prompt payment code as an antidote to late payment and the FSB has previously requested for large businesses to comply with it. The FSB say the 30 day payment terms should be the norm for large companies and best practice.
Only findings within the FSB survey will give the government cause for concern. Thousands of Small Businesses are expecting the first quarter of 2022 to worsen their financial standing as the economy continues to blow hot and cold at the turn of the new year.
Pessimism is rife amongst Small Business owners especially in public serving sectors such as hospitality, retail and food supply. Due to the fear created by the covid variant Imicron, many members of the public are living in a self imposed lockdown.
Spiralling energy costs have already hit some Small Businesses hard, forcing them to close over the winter months. The recent price cap introduced by regulator Ofgem did not include Commercial enterprises and Businesses.
A government spokesperson has spoke out on the matter. “The government is making significant reforms to help small businesses get paid on time, including halving the payment period in the prompt payment code and consulting on fines and other new powers for the Small Business commissioner”
“There is plenty of support available to ensure small businesses are well positioned to comply with UK border processes, including one-to-one advice through the Export support service”
Many have called for further support for small businesses in these worrying times and urged SME’s to take appropriate and effective Debt Collection action when possible.