The UK’s Federation of Small Businesses (FSB) has called on the government and its new small business commissioner to make 2018 the year that progress is made to tackle the country’s late payment problems.
Mike Cherry, national chairman of FSB, used his New Year message to urge newly appointed small business commissioner Paul Uppal to prioritise the issue in 2018, citing that an estimated £18bn is being held up by late payments.
“The coming weeks and months will be crucial time for the small business commissioner and his team to start making a real difference to firms impacted by the debilitating late and poor payments crisis across the UK,” he said.
“Just like everyone else, small businesses deserve to be paid promptly and should not face supply chain bullying. We want to see the worst offenders tackled and then named and shamed if they do not improve.”
Research released by the UK’s Prompt Payment Director last May found nearly one-fifth of SMEs said they were on the brink of bankruptcy or liquidation as a result of late payments, while 42% they had been forced to take out a loan because of cash flow challenges resulting from delayed payments.
There are more than 5.7m small businesses in the UK, representing over 99% of firms. Small businesses in the UK also account for 60% of private sector employment and deliver more than £1.9tn to the UK economy, according to the FSB.
Meanwhile, a survey by MarketInvoice revealed that of a sample of 80,000 invoices sent worldwide by UK firms, 62% were paid late, with an average value of over £50,000.
The survey also found that out of 93 countries that participated, Germany was the worst offender, taking on average an extra 28 days than agreed to settle payments. The worst performing sector was transport, where businesses were taking 25 days longer to pay invoices.
Bilal Mahmood, MarketInvoice spokesperson, said the situation was getting worse.
“For every day an invoice is late, it’s more time spent chasing payment and this means less time for business owners to focus on growing their business, creating innovative ideas and hiring more people,” he said.
“Things need to change. We want UK to be the best place in the world to start and grow a business but the UK’s SMEs are hampered by overdue payments. Such unfair payment practices impact a business’s ability to invest in growth and have no place in an economy that works for everyone.”
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