23 Apr 2014
Small and medium-sized businesses in the UK are still experiencing financial problems despite the trend towards economic recovery, recent research suggests.
The latest Red Flag Alert from Begbies Traynor has revealed a 22% increase in the number of SMEs experiencing significant financial difficulties, when compared with the same period last year.
In all, more than 200,000 small businesses reported financial problems, with many consumer-facing firms in particular experiencing difficulties with accessing suitable finance and competing with larger commercial chains.
Meanwhile, a separate report has found that late payment remains another significant barrier for many small UK businesses.
The latest survey from the Forum of Private Business (FPB) reports that 23% of its members experienced an increase in late payments over the course of the last year, while just 3% experienced a decrease. In addition, 29% saw an increase in the average amount of time taken by firms to settle a late payment.
According to the FPB, around £30bn is currently tied up in late payments, costing small firms time and resources, and meaning that many have to seek external finance.
Phil Orford, Chief Executive of the FPB, said, ‘Government is mulling over responses to a recent late payment discussion paper, which revealed ample ideas for tackling the issue in a more robust manner including the reintroduction of compulsory reporting of company payment terms and practices, and annual checks for Prompt Payment Code signatories’.
‘It is essential that government uses the recommendations to introduce effective measures and accepts that it not only has a responsibility to play in this area but also that its increased action can also act as an important catalyst for better payment practices.’