‘Half of small businesses in the UK are currently operating in the red, according to the latest Small Business Insights index.’
So starts this piece over on City AM.
‘Data from 250,000 SMEs showed that only 49.5 per cent of businesses were operating in positive cash flow last year.’
We know one reason – and have written about it before, in relation to posts on the Small Business Commissioner. That’s the trend for late payments, especially of small businesses by bigger counterparts.
‘The UK’s biggest firms’, says City AM, ‘were also found to be paying SMEs late, as on average 30-day invoices were paid after 46 days’.
This is one very real reason for small businesses’ cash-flow struggles, confirms the piece.
‘The study put together by Xero said that late payments was putting a serious cash squeeze on smaller businesses.’
And it quotes both Vicky Pryce, economist and previous Director General for Economics at the Department for Business, Innovation and Skills, and Paul Uppal, the Small Business Commissioner.
‘The impact of late payments on the economy cannot be exaggerated’, says Vicky Pryce.
‘Work done by the European Commission looking at both business to business and government to business payments found that late payments were directly associated with worsening firms’ cash flow positions, and particularly for smaller firms.’
And Paul Uppal is quoted as saying: ‘Small businesses are crucial to the health of our economy so it is vital that they feel supported in all areas, but particularly in the fight against late payments.’ This is why the Small Business Commissioner role was created.
‘My role as commissioner exists to help small businesses get paid on time, and while the government works on measures to address the late payment epidemic, businesses should not be afraid to come to us for help.’
‘Now is the time to make Britain the best place for entrepreneurs to flourish’, he says.
Is your small business struggling against late payments?