FSB calls on Government to prioritise late payment issues
Tackling the UK’s late payment culture should be a priority for the new government, the Federation of Small Businesses has warned.
The lobbying group has called for greater support for small businesses that are being prevented from growing as a result of unpaid invoices and cash flow pressures.
New regulations that require greater financial transparency among larger firms are seen as a step in the right direction but small firms are still struggling.
The FSB’s regional chairman for East Anglia, Salena Dawson has gone one step further to say that legislative action should be possible against the serial offenders.
The issue is particularly paramount in the East of England, with the FSB’s latest Time To Act report showing that 88% of small firms in the region are paid late.
Around 10% also state that 80% of their total custom includes delayed payments, an issue that can make it difficult to pay suppliers and staff.
Alongside unfavourable contract terms, many small businesses can also struggle to have the resources required to chase payments.
Late payments are especially an issue for small businesses that are overly reliant on one, or a few, main customers – a failure to pay by these customers can leave firms requiring insolvency and recovery procedures, and inhibits their ability to grow.
Should one business be forced to cease trading, a knock-on effect will inevitably follow as the suppliers that supplied them will also likely face difficulties.
Of course a business of any size can encounter issues, but there are a range of restructuring solutions available that can help ensure survival.
Corporate advisory services can also help to realise the potential of a business and find positive outcomes for all parties involved.
The business rates system is another area of focus, as higher rates resulting from recalculations earlier this year have placed pressure on small firms across the UK.
Potential action on the issue has been mooted by all three main political parties.
By Phil Smith