Small Business Owners Going Without Wages Due to Late Payment – Debt Recovery Solicitors Can Help
There is an alarming and entrenched late payment culture in the UK, and a recent report by Hitachi Capital Business Finance suggests that the situation is getting worse. This is particularly so for small businesses, where the research shows that 17% of small business owners go without wages because they aren’t being paid. This figure increases to 27% when those businesses already facing insolvency are included. In this article, we look in more detail at the figures and suggest how our debt recovery solicitors can help.
The Report in Detail
The number of small businesses experiencing cash flow difficulties as a result of non or late payment of goods and services supplied now stands at 52%. It doesn’t matter how many orders a business has: success and survival is determined by getting paid. Not getting paid leads to cash flow problems. That often means small business owners pay themselves less to try and survive with the threat of insolvency growing all the time.
Late or non-payment causes many painful and difficult problems. The main issues uncovered by the report included:
- 31% of respondents said that they had incurred bank charges and fees as a result of needing to secure short-term borrowing to fill the hole left by late or non-payment.
- Over 40% of small businesses who were struggling to survive said that as a result of late payments, they were unable to pay their own suppliers on time. This caused adverse effects on long-term relationships.
- In addition to late paying their own suppliers, 23% of struggling small businesses said they were more than twice as likely to get behind with payments due to HMRC.
These figures are worrying for business as a whole in the UK, but particularly so for small businesses who often do not have the time or resources to allocate towards debt recovery.
The Number of Companies Involved is Large
The generally accepted definition of a small business – as focused on in the Hitachi report – is one which employs less than 50 staff with a turnover of less than £10 million. There are over 5 million small businesses in the UK, so if we extrapolate the Hitachi findings of 52% of small businesses experiencing cash flow problems as a result of late payment, we are looking at c.2.5 million companies who are affected to some extent or other by late payment.
What Can be Done?
The government is consulting and promising new legislation. However, this will take time. This is where we come in. We are a firm of specialist commercial debt recovery solicitors. Based in Birmingham but acting for clients across the country, we are the UK’s longest established debt recovery solicitors. Since 1978 we have recovered £millions of late payments for our clients, often by issuing Letters Before Action, which are quick and cost effective.
Many of our clients have been with us for 10 years or more. Click here to see some of their testimonials.
If you are experiencing late payments from your clients, please call us on 01922 700730 or contact us. We will then discuss the best way of dealing with your late payments problem.