According to a study, almost one in ten small companies might collapse this year due to late payments from customers.
8% of small firms polled by the Federation of Small Businesses claimed that late payments were now endangering their businesses’ sustainability.
According to the FSB poll, which included more than 1,200 company owners, over a third (30%) have noticed the lengthening of invoice late payments during the previous three months.
8% of respondents reported being subjected to extra deceptive payment techniques.
According to new government figures, since last year’s lockdowns, the number of small businesses in Britain has decreased by over half a million.
More small businesses anticipate their performance to suffer over the next three months than expect an improvement, resulting in a new dip in small company confidence. Retail is the most gloomy small business industry, followed by lodging and food services.
A majority of small enterprises (78%) report increased expenses. The cost of fuel and utilities accounted for 46% and 45%, respectively, of the overall cost increase.
More than seventy-four per cent of small businesses that export reported flat or declining international sales in Q4 of this year, as the UK implements more stringent import restrictions on products from the EU. Over a third of these companies (38%) reported a reduction in exports. According to a previous FSB study, only a quarter of small importers is completely prepared for new import inspections.
Chairman of the FSB, Mike Cherry, stated: “The small business sector has shrunk over the last year, and history is destined to repeat itself unless action is made immediately to address the issues it confronts.
“Small businesses are suffering flashpoint after flashpoint following another disappointing holiday season. Importers and exporters are already dealing with a new wave of paperwork; in three months, the jobs tax, which comprises national insurance payments, dividend taxes, business rates bills, and an increase in the national living wage, will be implemented. Additionally, operational expenses are soaring, and many will soon be attempting to negotiate energy arrangements without the muscle of huge corporations or the consumer safeguards that are now in place.
“Even before the epidemic, late payment was ruining hundreds of small firms – the outbreak has made problems worse.”