Accessing working capital tough for UK small businesses

Having working capital available is an essential part of any business, especially when it comes to having the finances to drive growth.

However, such is the scale of the late payment problem in the UK that many firms are continually facing difficulties, meaning they are forced to postpone growth plans as a result.

Some £266 billion of turnover is lost as a result of late payments – a sum that could provide a huge boost to the UK economy.

Research from Crossflow Payments suggests that 55% of all late payments take at least ten days to be paid, although some cases can take months to reach closure.

Such is the impact of late payments, that 22% of businesses would increase their marketing if they had they budget they were owed available.

Similarly, 17% of those questioned said they would hire staff and the same proportion would increase salaries were they to have all the finances they are owed available.

The Government has looked to tackle the problem via the prompt payment code, which requires large businesses to report their payment practices and policies twice annually.

While the research found some of the Government’s suppliers have committed to paying 95% of invoices within a 60 day period, around three quarters of small business owners said they did not believe the code would alleviate the late payment problem.

At the same time, just one in five owners had heard of the new regulations while most suggested that larger firms would implemented longer payment terms in order to maintain existing levels of working capital.

Businesses can face cash flow issues at any point, especially if faced unexpected outlays, meaning they can require restructuring in order to continue trading effectively.

For those fearing financial difficulty, undertaking an independent business review is recommended as it can take an unbiased look at a company’s assets, finances and forecasts and highlight potential problem areas.

This can make all the difference in the long term, as business processes can be streamlined and better management processes implemented.


By Phil Smith


If you would like to have a free no obligation chat with one of our advisers please call us on 0207 186 1144.

View all Business Insights