Federation of Small Businesses (FSB) has called for urgent government intervention to improve the way firms are paid, claiming that more than 440,000 small firms are in danger due to the late payment “crisis”.
FSB has said every big business and government organisation should be abiding by the prompt payment code, arguing that 30-day payment terms should be “the norm for those who are committed to environmental, social and governance best practice”.
According to a survey done by FSB of more than 1,200 members, almost a third of small businesses (30 per cent) had seen the late payment of invoices increase over the last three months, with at least 8 per cent warning that the problem has become so bad that it was threatening the viability of their business.
Other findings of the survey revealed that more small firms now expect their performance to worsen over the coming three months than expect an improvement. Situation is worse in the retail, accommodation and food industries, as per FSB survey.
“Late payment was destroying thousands of small businesses even before the pandemic hit – the pandemic has made matters worse,” The Guardian quoted FSB national chair, Mike Cherry, as saying.
“In the past, the government has rightly identified greater board accountability as key to spurring change in this area, but delivery has been slow.”
Cherry added that small firms, which employ more than 13 million workers in the UK, are facing battles on almost every front, including new customs checks on imports from the EU and looming energy cost crisis
FSB said more than 400,000 small firms have shut down since the start of the pandemic for various reasons, and that the future of a similar number is now threatened by this problem alone.
Reacting to the claims, a government spokesman said that significant reforms are being made to help small businesses get paid on time, including halving the payment period in the prompt payment code and consulting on fines and other new powers for the Small Business Commissioner.
“There is plenty of support available to ensure small businesses are well positioned to comply with UK border processes, including one-to-one advice through the Export Support Service,” said the spokesperson.
