End to late payment culture could add 3.4m jobs to UK labour market
Britain’s late payment culture is now responsible for a 266bn hole in small business working capital, according to new research highlightingits impact on company growth and workforce expansion.
A survey of over 1, 000 small business owners, by financial services firm Crossflow Payments, asked respondents where they would invest if all outstanding invoices representing 15 per cent of annual turnover for the small business community were immediately paid.
Two-thirds of small business owners would hire up to five new members of staff if big business clients paid up bringing a potential 3.4m jobs to the economy.
Further responses found over a fifth of business leaders would increase their marketing and sales budgets, while 17 per cent would increase the wages of their workforce.
Commenting on the state of Britain’s late payment culture, Tony Duggan, Crossflow Payments CEO, said the time had come for an effective government response.
delays in receiving payment promptly from customers is acting as a handbrake [for small business owners], preventing them from making key investment decisions for the future, and ultimately stunting growth. In 2017, it should no longer be the case that businesses face such hurdles, he said in a statement.
The findings also indicated the late payment culture could be worsening. A tenth of respondents said the problemhad been aggravated since the EU referendum in June 2016.
brexit is increasing the issue of late payments and reducing investment by SMEs at a time when the UK faces economic uncertainty, Duggan added.
Labour Party leader Jeremy Corbyn recently pledged his party’s commitment to ending the late payment culture damaging smaller firms. Should Labour win the upcoming general election in June, Corbyn would introduce a£30-day deadline for all payments invoiced to small suppliers from large businesses.
Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.
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