The UK’s Small Business community is under serious threat according to a survey by the Federation of Small Businesses (FSB). It has been reported that 440,000 the UK’s Small Business community is under serious threat from a tidal wave of late payments to Small Businesses.
The Federation of Small Businesses (FSB) requested immediate government intervention to support Small Businesses by improving payment times. The FSB has been joined in raising concerns by leading UK Debt Collection Agency, Federal Management.
The FSB’s recent survey showed that 30% of Small Business have seen a sharp increase unpaid invoices over the past few months. Alarmingly, 8% of SME’s that took part in the survey advised that the problem of unpaid invoices is so bad that it is a serious threat to their very existence.
The problem of Small Businesses dealing with unpaid invoices is hardly unprecedented. But what is unprecedented is the pandemic and the huge ripple effect it has had on the British economy over the past 20 months.
The problem of Unpaid invoices is nothing new
The problem of unpaid invoices is nothing new. Since the wheels of commerce first turned there has been issues with non-payment. Tackling unpaid invoices can sometimes be a taboo subject for small businesses but the effects of invoice non-payment can be huge.
Small Business owners often go without paying themselves. They are also often forced to pay their suppliers well before they get their invoices paid, leaving a black hole in their cash flow. Not to mention, the impact on mental health of any Business owner.
Much is made of those that are ‘in debt’ but what about those on the other end of the spectrum.
Late payment is one thing, non-payment is another. It has been widely reported in the media in the past of large companies not paying their small business suppliers. The government introduced the prompt payment code a number of years ago but it seems to have had little or no effect.
FSB National Chair Mike Cherry commented “Late payment was destroying small businesses even before the pandemic hit. The pandemic has made 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”
Small Business Debt Collection Action
Chris Spencer of the UK’s leading Debt Collection Agency Federal Management said “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 post Brexit import checks and spiralling invoice non-payment are just some of the day-to-day battles SME’s are facing in the UK.
Government action on late payment
In the past, the government has tried to implement the prompt payment code to combat late payment and the FSB has been a loud voice in calling for large Companies to adhere to it. The FSB say thirty-day payment terms should be the norm for large companies and best practice.
The latest findings within the FSB survey will surely give the Business Ministers 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.
Confidence is low 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 with some of society living in a self-imposed personal lockdown.
Massive rises in energy costs have already hit some UK Small Businesses hard. Many have been forced to close over the winter months. The recent price cap introduced by regulator Ofgem did not include Commercial enterprises and Businesses.
Government is making significant reforms
A government spokesperson has spoken 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”
Small Businesses turning to Professional Debt Collection Agencies
The UK’s Debt Collection Industry has been a crutch of support for beleaguered cash strapped Small Businesses.
Federal Management are the leading Business Debt Collection Agency in the UK, collecting millions for their clients every year. Their clients include high end organisations and even a number of Premiership Football clubs.
Federal Management are highly revered for their Small Business Debt Collection services. For a small instruction fee, they provide a comprehensive service to their clients for the fraction of the cost of going down the expensive legal route.
For personal debt collection, which is collecting debt from private individuals, Frontline Collections are the famous name. They are the first ever Gold Approved supplier of debt collection services to the Independent Schools Association, such is their high standing.
Alternatively, you can Compare Debt Collection Agencies via industry comparison site www.best4debtcollection.co.uk
