Originally written by Antti-Jussi Suominen on Small Business
Small businesses face an ongoing threat from late payments. Chancellor Phillip Hammond announced in his Spring Statement plans to “tackle the scourge of late payments” by large corporations to their small suppliers. Promising a “brighter future”’ for the UK’s 5.6 million small businesses, he outlined a requirement for big companies to report on how they’re paying their suppliers.
According to the Federation of Small Businesses, around four in five businesses have been paid late, the impact of which is far-reaching.
Bacs, the bank money transfer service, has calculated that Britain’s small businesses spent £6.7 billion in 2018 just to collect money they were already owed. Furthermore, the same research revealed that over a quarter of small business owners who have experienced late payments have been forced to pay their own suppliers late, and 28pc say they’ve had to cut their own salaries in order to keep their business afloat. Indeed, cash flow issues arising from late payments mean that more than two million people in the UK may not have been paid in time.
Late payments result in the closure of more than 50,000 small businesses each year, says the FSB, costing the economy £2.5 billion.