A Small Business survey jointly conducted by two of the UK’s top Debt Collection agencies has sparked debate over the true extent of the damage late payment is causing to local Small Business owners. There has been a huge rise in small business late payments across the UK as the economy staggers its way into 2023.
The survey jointly undertaken by Debt Collection Agencies Federal Management and Frontline Collections revealed that nearly 8 in 10 small business owners are suffering. 79% of the Small Business owners questioned advised that their mental health suffered as a result of late payment. The majority of the smallest business owners said they are constantly worrying about not getting paid at all.
Small Local Business owners are being exposed to stress, financial worries, insomnia, and depression and have even seen personal relationships affected by the problems late payment is causing them. 41% of SME owners said that late payments had caused them issues outside of work.
More worryingly, the Local Small Business owners survey showed that a shocking 48% of Small Business owners are not sure whether their businesses will still be trading this time next year.
The survey also found that 66% of SME owners have already had to supplement their Small Businesses’ cash flow with the use of personal funds. This includes many that have had to re-mortgage their homes and cash in pension policies.
The true cost of Small Business late payment
The impact of Small Business late payments has never been more evident. Worsening morale amongst the UK’s SME community is leading to fear. Small Businesses are the engine room of the UK’s economy and the repercussions of Small Businesses closing is felt in local communities.
Despite the government’s best efforts post covid, the spiraling numbers of businesses going bust continue. Economic uncertainty coupled with ever-rising running costs is causing many Small Business owners to simply give up.
Top Insolvency firm Begbies Traynor has warned that the number of firms in significant distress is worsening. They advised that 610,405 businesses are now rated as being in financial distress across the UK.
They also warned that Small Businesses in the UK are particularly vulnerable as they lack the financial reserves that larger companies do. Winding-up petitions have more than doubled whilst Business CCJs are up 52% along with CCJ enforcement. This is viewed by many as a gloomy outlook for the UK’s economy and the local Small Businesses.
Small Business owners feeling powerless to act
Solving the short-term Small Business late payment crisis is essential. This is not just affecting B2B transactions, Small Businesses are owed money by private consumers for goods or services provided.
Chasing unpaid invoices and overdue accounts is time-consuming, stressful, and largely ineffective in many instances. The feeling that nothing can be done only worsens their mental states. Various government initiatives have done almost nothing to tackle the backbone of Britain’s late payment issues.
Marc Curtis-Smith, the Managing Director of Business Debt Collection Experts Federal Management commented, “Every day Federal Management receives calls from beleaguered Small Business Owners at the end of their tether. People are deliberately not paying them and we understand their frustrations”
“The UK media tends to focus on those in debt and rarely spares a consideration for those on the other end of the spectrum; the people who are owed money and suffering the ramifications of such. It is entirely unjust and unfair. This is why we are so passionate about helping Small Businesses by way of recovering debts where possible and as quickly as possible”
Hidden damage being caused by SME late payments
Previous surveys have also highlighted the unseen damage caused by late payments. A majority of small business owners have advised that unpaid invoices have had a detrimental effect on their personal life as well as their work. The stress of small business late payments weighs heavily on their minds.
Small Business insolvencies have continued to increase and unless the tide is stemmed, the problem will not end anytime soon.
About Small Business Debt Collection solutions
The Award-winning Federal Management has been a leading UK Small Business Debt Collection specialist for nearly 20 years. They normally operate within the B2B sector and have a sterling reputation.
For Personal Debt Collection services, Frontline Collections are an accredited and FCA-regulated Personal Debt Collection specialist acting on behalf of Small Businesses such as dentists, vets, and private medical companies in recovering unpaid fees from individuals.