Late payments ‘remain a real problem’ for UK small and medium-sized enterprises (SMEs), research carried out by accounting software company Xero has suggested.
Its Small Business Insights report analysed 7.5 million invoices with 30-day payment terms that passed through the Xero system, and revealed that 52% of SMEs’ invoices were paid late in 2017, with the worst months for late payments falling in the first quarter of the year.
Xero also found that the average time taken for an invoice to be paid was 40 days, meaning that the 30-day payment term had not been adhered to.
Further analysis of different business sectors within the FTSE 350 showed that food producers took the longest amount of time to pay invoices, taking 60 days to pay, on average.
Businesses in the construction and materials industry took an average of 57 days to pay invoices, and household goods companies took an average of 53 days. Meanwhile, the pharmaceuticals sector payed invoices the most inconsistently, with some payments taking as little as 37 days, and others as many as 68 days.
Late payments have a ‘broader effect’ on small businesses, with affected firms often struggling to carry out accurate financial forecasting, said Xero.
Chancellor Philip Hammond has pledged to tackle the issue of late payments, and the government appointed the first Small Business Commissioner, Paul Uppal, in October 2017. Mr Uppal has been tasked with helping small firms with their payment disputes.
He said: ‘Small businesses are crucial to the health of our economy so it is vital that they feel supported in all areas, but particularly in the fight against late payments.’
A survey carried out by distribution group CitySprint has suggested that UK firms are considering trading internationally in order to grow and expand their business.
The survey, which polled over 1,000 business owners and directors, revealed that around 1.3 million small and medium-sized enterprises (SMEs) are focusing on international trade in their plans to expand their business.
78% of those seeking to trade overseas indicated that they would like to do business in Europe, CitySprint found.
A further 55% are considering trading in North America, whilst an additional 36% expressed an interest in trading in Asia.
Businesses in the retail, manufacturing, arts, IT and utilities industries are most likely to consider trading internationally, CitySprint suggested.
Meanwhile, the survey also revealed that 52% of firms have plans to expand their business within the UK.
Commenting on the findings, Patrick Gallagher, Group CEO at CitySprint, said: ‘The UK’s smaller enterprises show no shortage of ambition when it comes to exploring new markets.
‘Whether it’s going global or taking trade nationwide for the first time, scaling up is a huge milestone in any organisation’s history. It needs to be done thoughtfully and with care – but it doesn’t have to be done in isolation. SMEs must work together to realise their goals.’
With less than one month until the introduction of the new General Data Protection Regulation (GDPR), the Federation of Small Businesses (FSB) has warned small and medium-sized enterprises (SMEs) that time is running out for them to prepare.
The business group stated that small businesses face an ‘uphill challenge’ in ensuring that they are compliant by 25 May 2018 – the date from which the new regulation takes effect.
Under the new rules, organisations which collect, store and process individuals’ personal data will be subject to new obligations, with an increased emphasis on accountability and transparency.
The financial penalties for failing to comply are severe, with fines costing up to €20 million or up to 4% of total annual worldwide revenue, whichever is the greater.
The FSB has called on the Information Commissioner’s Office (ICO), the regulatory body that will monitor firms’ compliance, to adopt an ‘understanding approach’ to GDPR enforcement.
‘As the GDPR deadline swiftly approaches, there is a real danger that many small businesses are yet to have adequately prepared for the changes,’ said Mike Cherry, National Chairman of the FSB.
‘Fortunately for these businesses, there is still time on the clock to start, or finish, their preparations.
‘The GDPR is the largest shake-up of data protection laws for years, and whether you are a personal trainer or a consultant, most businesses will have to implement changes to their current practices to make sure they are complying with the new rules.’
Further information on the GDPR can be found on the ICO website.
A survey carried out by market research group BDRC has suggested that many UK small and medium-sized enterprises (SMEs) are choosing to fund their expansion and growth plans using their own finances.
The survey, which quizzed over 130,000 SMEs, revealed that UK businesses are ‘more likely to be self-reliant’ when it comes to sourcing finance for their expansion plans, with many self-funding via retained profits, trade credit and credit balances.
Of those firms who did seek to secure a loan during 2017, 41% were confident that a bank would lend to them, the survey revealed.
Some 38% of SMEs made use of external finance last year, with 31% using ‘core finance’, including loans, overdrafts and credit cards.
Commenting on the findings, Stephen Pegge, Director of Commercial Finance at UK Finance, said: ‘It is encouraging that increasing numbers of small firms are looking to use finance to grow their business in the year ahead.
‘However, most SMEs are still self-funding, with the vast majority not seeking any new external finance in the past year.’
A survey carried out by American Express and Oxford Economics has suggested that UK small and medium-sized enterprises (SMEs) are feeling optimistic in regard to their role within the global economy.
The survey aimed to identify the key challenges businesses face in 2018, and outline the strategies and opportunities they will make use of over the coming year.
57% of businesses surveyed stated that they feel optimistic about the global economy and their role in it.
UK SMEs intend to go ‘back to basics’ this year, and will prioritise meeting their customers’ demands in order to drive growth. The research revealed that 45% of firms believe that this is crucial to revenue growth.
The survey also found that 41% of UK firms will use the advantages associated with being an SME to help accelerate growth in 2018.
Commenting on the matter, Jose Carvalho, Senior Vice President at American Express Global Commercial Payments, said: ‘Our research shows that the UK’s smaller enterprises are primed for success in 2018 by focusing on their special advantages, staying close to their customers and improving efficiency.
‘As an integral part of the economy, and the frontline of British business, SME optimism should instill confidence in other UK businesses and stakeholders.’
Following the news that both petrol and diesel prices have increased considerably, the Federation of Small Businesses (FSB) has revealed that many small firms are being affected by rising operating costs as a result.
According to figures published by the government, December saw prices for petrol and diesel rise to their highest levels since 2014.
Petrol prices rose to 121.11p at the end of last year, whilst diesel prices reached 123.46p.
The increases can be partly attributed to a rise in the cost of oil. Commenting on the issue, Simon Williams, Fuel Spokesman for the RAC, said: ‘December was the month oil reached its highest point for over two and a half years – something which motorists are now feeling the effect of at the pumps.’
The FSB found that the proportion of its members reporting a rise in operating costs is at its highest in five years. Nearly a third of these members stated that fuel costs are a main contributor to the rise in operating expenditure.
Mike Cherry, National Chairman of the FSB, said: ‘Affordable travel on roads is absolutely vital to the success of small businesses and local economies. That’s why it’s critical that the fuel duty freeze set out in the Autumn Budget is continued in the future.
‘Over the coming year, we look forward to the government doing its utmost to help small firms battle the rapid rise in operating costs. Where vehicles are concerned, that also means taking a hard look at the ever-increasing Insurance Premium Tax (IPT).’
The government has launched its new complaint handling service, which will be managed by the new Small Business Commissioner, Paul Uppal.
The service will seek to resolve complaints from small businesses in regard to unfair payment practices and late payments.
Firms can also visit the Small Business Commissioner’s new website, which will provide guidance to businesses on payment issues, including advice on which course of action to take if a payment is overdue.
It will also supply guidance on how to check if the correct information has been provided to the correct person in order for an invoice to be paid, and chase when a payment is overdue. The Small Business Commissioner’s website can be accessed here.
Commenting on the launch of the new service, the Small Business Commissioner, Paul Uppal, stated: ‘My mission is to help all small businesses nurture positive and lasting relationships with their customers that work in the best interests of both.’
Meanwhile, the Federation of Small Businesses (FSB) welcomed the launch. Mike Cherry, its National Chairman, said: ‘The Small Business Commissioner is crucial to turning the tide on [the] late payments culture. FSB will be encouraging small businesses affected to use the service, and we hope then to see clear actions taken to tackle the worst examples of supply chain bullying.
‘Success will be a UK economic culture where a business that does a job promptly is paid promptly.’