Red tape and late payments holding back small UK firms
Late payments put the brakes on the growth ambitions of more than one in five small businesses in 2015, according to HitachI Capital’s latest quarterly British Business Barometer.
Delayed settlement of invoices and bills, as well as customers who failed to pay altogether, meant that 19 per cent of the small enterprises surveyed were concerned with volatile or unpredictable cash flow up from 15 per cent in 2014.
Slow payments were particularly troubling for small firms in the construction industry, where almost one third of respondents believed the problem was impacting on their ability to grow their businesses.
Small enterprises in the UK were owed 26.8bn in late payment debt in July and spent an average of almost 1, 000 per month on chasing them last year, a recent study by payment company Bacs revealed.
There are hopes that this will change next year. From April 2016, large firms will be required by law to disclose payment terms and the proportion of invoices paid late while a small business commissioner will be appointed to champion small firms locked into disputes with bigger ones.
Lindsay Whitelaw, the chairman of invoice finance company URICA, said: The signs of improvement in 2016 are looking positive, with the Department for Business, Innovation & Skills? agenda pointing firmly towards improving SMEs? chances of success.
we look on with great interest at who will be appointed to the role of small business commissioner in 2016. This individual will be charged specifically with tackling late invoice payments head on. This is an important and significant step in the right direction, he added.
Hannah Wilkinson is a reporter for Business Advice. She studied economics and management at Oxford University and prior to joining Business Advice wrote for Kensington and Chelsea Today about business and economics as well as running a tutoring company.