The late payment crisis is getting worse in the UK

84% of small UK business owners now regularly report being paid late, with a third (33%) admitting that at least one in four payments they’re owed arrives later than agreed.

FSB analysis has found that in the past two years, 37% of small business owners said that payment terms they’d agreed previously with suppliers had lengthened, which in turn had created cash flow issues.

Only 4% of small UK company owners reported any improvement in terms of late payments in the last two years.
Ahead of the chancellor’s first ever Spring Statement on 13 March, national chairman at the FSB, Mike Cherry, has called on Philip Hammond to use his speech to parliament to tackle the culture of late payments once and for all.

He said that the late payment crisis will only end when will be a fundamental cultural shift in the boardroom, with those at the top collectively addressing the issue, and directors held accountable for supply chain support.

According to the FSB, late payments currently result in around 50,000 business deaths a year in the UK, at a cost of GBP 2.5 billion to the economy.

Most recently, the collapse of construction giant Carillion has put Britain’s late payment problem back under the spotlight. Thousands of jobs were lost and hundreds of smaller businesses forced to close as because Britain’s largest construction company was unable to pay its debts.

The chancellor was also urged to use the Spring Statement to address key tax-related issues for small businesses, including the government’s planned consultation on VAT and extension of IR35 rules into the private sector.

Cherry went on to describe the Spring Statement as an opportunity to reinforce commitment to promises already made, including (amongst other pledges) refunds for those businesses hit by the staircase tax and the abolition of Class Two national insurance contributions.