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. But the Hitachi Capital report also found that bureaucracy continues to be seen as a serious impediment to SMEs ? and 22 per cent were of the view that it was getting worse rather than better, despite government promises. This follows findings in Zurich?s SME Risk Index ? published in November ? that discovered over half of SME decision makers would address the volume of red tape inflicted on business if they were appointed chancellor of the exchequer for the day. Furthermore, many firms are worried that the introduction of quarterly online tax reporting requirements in 2020 ? part of the chancellor?s plan to create the most ?digitally advanced tax administration in the world? ? will add to this burden. ?While this 2020 vision may be seen as a much-needed advancement in the ever-evolving digital age, for many businesses initially this will be an extra layer of red tape,? said Tina Riches, a national tax partner at accountancy firm Smith & Williamson.
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.