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Half a Million UK Businesses at risk of closure due to late invoice payments.
Jul 17, 2022 | 2 min read Finance
Half a Million UK Businesses at risk of closure due to late invoice payments.
Jul 17, 2022 | 2 min read
Recent data released from the FSB (Federation of Small Businesses) suggests nearly half a million UK small and medium sized businesses are under severe threat of insolvency due to unfair and slow payment practices.
A study commissioned by Good Business Pays and carried out by the Centre for Economics and Business Research (CEBR), estimates that if small businesses’ invoices were paid on the day they were submitted, their revenues would increase by 40-60 billion pounds annually! This no doubt be a significant and timely income boost for small UK businesses especially as operating costs are rising day-by-day.
Liz Barclay, Small Business Commissioner, said: “Small businesses need to know when they will be paid to give them the confidence to invest in training, recruitment, growth. They need to be paid quickly so that they can manage their cashflow without having to borrow to fill any gaps. Borrowing is costly and increasingly difficult. If bigger business customers want their smaller suppliers to survive, they need to work together and pay fast and fair.”
In addition to this the price of goods, especially for raw materials which are rising significantly causing yet more stress on the financial situation of many small businesses. Soaring Inflation is being felt by most small businesses, especially those operating within the manufacturing sector (the worst performing industry for late payments in first quarter of 2022) which are heavily reliant on imported materials to manufacture their products for the UK and International markets.
Inflation combined with late payments practices are giving small businesses no option but take out short-term bridging finance to help manage their cash flow or risk going bust. This creates a further knock-on effect further down the supply-chain with other local small and micro businesses also not getting paid as they don’t have the funds available to meet supplier costs.
Speaking via recorded video to the event, Vaughan Gething MS, the Welsh Government Minister for the Economy, said: “In the context of the cost-of-living crisis, it is more important than ever that SME’s receive prompt payment for their goods and services, to free up cash flow and keep them trading successfully.”
If not, the UK economy could see even more unnecessary business casualties as we head into what some major economists are saying as a major economic downturn towards the end of 2022.
A study commissioned by Good Business Pays and carried out by the Centre for Economics and Business Research (CEBR), estimates that if small businesses’ invoices were paid on the day they were submitted, their revenues would increase by 40-60 billion pounds annually! This no doubt be a significant and timely income boost for small UK businesses especially as operating costs are rising day-by-day.
Liz Barclay, Small Business Commissioner, said: “Small businesses need to know when they will be paid to give them the confidence to invest in training, recruitment, growth. They need to be paid quickly so that they can manage their cashflow without having to borrow to fill any gaps. Borrowing is costly and increasingly difficult. If bigger business customers want their smaller suppliers to survive, they need to work together and pay fast and fair.”
In addition to this the price of goods, especially for raw materials which are rising significantly causing yet more stress on the financial situation of many small businesses. Soaring Inflation is being felt by most small businesses, especially those operating within the manufacturing sector (the worst performing industry for late payments in first quarter of 2022) which are heavily reliant on imported materials to manufacture their products for the UK and International markets.
Inflation combined with late payments practices are giving small businesses no option but take out short-term bridging finance to help manage their cash flow or risk going bust. This creates a further knock-on effect further down the supply-chain with other local small and micro businesses also not getting paid as they don’t have the funds available to meet supplier costs.
Speaking via recorded video to the event, Vaughan Gething MS, the Welsh Government Minister for the Economy, said: “In the context of the cost-of-living crisis, it is more important than ever that SME’s receive prompt payment for their goods and services, to free up cash flow and keep them trading successfully.”
If not, the UK economy could see even more unnecessary business casualties as we head into what some major economists are saying as a major economic downturn towards the end of 2022.
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