Late Payments Threaten 8% of UK Small Businesses

The U.K.’s Federation of Small Businesses says that a “late payment crisis,” coupled with high inflation and increased administration for international traders, is threatening to shrink the business community.

The FSB’s latest Small Business Index (SBI) found that nearly one in three (30%) of the businesses surveyed has seen an increase late payments on invoices in the last three months. Of those businesses, nearly 10% say late payments threaten their viability.

“Late Payment was destroying thousands of small businesses even before the pandemic hit — the pandemic has made matters worse,” said FSB National Chairman Mike Cherry.

“The pandemic is absorbing bandwidth, and rightly so, but policymakers need to understand that late payment is the issue that keeps thousands of entrepreneurs up at night, and one that has worsened in lockstep with lockdowns. We need to see words turned to action,” Cherry said.

The most recent government statistics show an estimate 5.5 million small businesses in the U.K., a figure which dropped by 400,000 during the lockdowns. The FSB says its findings suggest a similar loss could occur due to late payments.

The report also found confidence among small businesses fell to -8.5 in the fourth quarter “during another uncertain festive season.”

That figure has dropped every quarter of 2021, from 27.3 at the start of last year. The FSB said businesses who expect a bad Q1 of 2022 outweigh those who are positive about the first three months of the year. This pessimism is especially strong in the retail, food and accommodation sectors.

Learn more: 40% of Consumers Are Pessimistic About the Economy, up From 32% in May

And this gloomy outlook isn’t confined to just one side of the counter. As Reality Check: The Paycheck-to-Paycheck Report, a PYMNTS and LendingClub collaboration found, 40% of consumers were pessimistic about the economy in May, up from 32% in the spring.