Microbusinesses pessimistic over late payment issues
The UK’s micro-businesses don’t expect the appointment of a small business commissioner to tackle late payments to make a difference.
Just 2% of freelancers and microbusinesses expect the individual to overcome the issues they face, according to research from FreeAgent.
Carried out by OnePoll after being commissioned by the cloud accounting software firm, the study revealed a startling lack of confidence in the Government’s efforts to tackle late payment issues.
Of the 700 microbusinesses questioned, 57% did not even know what a commissioner was due to be appointed to tackle late payments.
The individual will be tasked with becoming a “national spokesperson for small businesses affected by payment issues” according to the Government.
Late payments are a particular prominent problem among freelancers and microbusinesses, as 51% of all invoices sent by them in 2015 – were paid late.
In some of the worst performing regions of the country, including Sheffield, as few as one in four invoices were paid within their agreed payment terms.
Given the high proportion of microbusinesses that are faced with late payments, it is easy to see why they are concerned over the impact that the new small business commissioner may have.
Late payments can put great pressure on business cash flow, and continued delayed payments can increase the risk of insolvency for those small businesses that are unable to overcome their debts.
An alternative for small businesses is to consider a merger or acquisition, as such a move can ensure business survival in the long term.
It is not yet known how the new small business commissioner will go about tackling late payments, although the individual will require sufficient powers in order to do so.
Penalising late payers and targeting persistent offenders will be key, and FreeAgent suggests it may not be enough to merely name and shame companies, as the damage by that point may have already been done.
By Phil Smith