Small Business Index
The Small Business Index (SBI) has shown that a third of small firms have been impacted by poor payment practices in recent months.
Findings by a new study indicated that high inflation and increasing red tape for smaller firms that trade internationally is creating serious issues only a few days into 2022.
More than 1,200 business owners were surveyed for the study, and the findings showed that almost one in three (30%) had seen late payment of invoices increase over the past three months. A further 8% confirmed that they had experienced other forms of poor payment practice, as well as 8% who claimed that these late payments were threatening their businesses.
Unfortunately, most small businesses expect their performances to worsen in the coming months rather than improve.
Brexit red tape
Out of the small and medium firms surveyed, the vast majority (78%) reported a rise in costs. Most companies that participated in the survey indicated international sales either plateaued or dropped during the past quarter. This is largely due to Brexit, which has ushered in full import checks and rules of origin requirements for UK firms that conduct business within the EU.
FSB Chairman Mike Cherry said the following:
“Small firms that do business internationally are usually among our most profitable and innovative. That’s why it’s so hard to watch so many becoming increasingly weighed down by bureaucracy.”
Impact of COVID-19
As well as the new red tape which has been implemented post-Brexit affecting payments, the COVID-19 pandemic has also had a hand in making things difficult for small and medium business owners.
Mike Cherry also discussed this issue:
“Late payment was destroying thousands of small businesses even before the pandemic hit. The pandemic has made matters worse.”
COVID-19 has affected almost every facet of day-to-day life for people across the globe. It should come as no surprise that it has also affected small to medium businesses, as their usual consumers are concerned about the rise of the new Omicron variant which case numbers show is spreading fast.
What should be done?
Mr Cherry believes it is vital that Chancellor Rishi Sunak steps in to offer aid to these businesses. Small to medium businesses often make up the lifeblood of a successful society, and it could be economically devastating if many firms disappear due to circumstances beyond their control.
Similarly, the Federation of Small Businesses (FSB) has warned that the small and medium-sized business community will shrink unless the government make a serious pledge to tackle these issues.
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