Four in five small UK firms are owed money
Four of every five small businesses in the UK is owed money, according to new research from Simply Business.
The study found that 80% of companies are facing up to unpaid invoices which are piling pressure on to their cash flow.
A fear of chasing larger firms for payment due to worries that it will cost business is also influencing business decisions among the UK’s network of more than five million SMEs.
These concerns over cash flow are making it difficult for companies to plan for future growth, although the potential appointment of a small business commissioner by the Government should improve the situation.
It might be too late for some businesses though, especially since Company Check found that nearly 70% of firms were forced to write off bad debt in 2016.
The FSB suggested that up to 2.8 million companies may have been exposed to financial issues, while around half that number lacked any sort of protection against the losses that followed.
The commissioner is set to take on the responsibility of resolving payment disputes between small businesses and their larger counterparts.
Part of the move will reportedly see a culture change among UK businesses in an effort to ensure that SMEs are not held to ransom in deals.
Payment processor Bacs puts the total owed by larger firms at roughly half of the overall amount owed in late payments to SMEs – around £26 billion.
For small firms that are hit by bad debt and which lack the necessary insurance cover, the results of late payments could be disastrous – being paid on time could really be the difference between success and failure.
By Phil Smith