Late payments have been the scourge of small businesses almost since time immemorial. Around 50,000 SMEs go bust every year as a result, according to FSB research, with more than £23.4 billion in late payments currently owed.
The problem has been exacerbated by the onset of the Covid-19 pandemic and our exit from the European Union, with clients delaying payments as they rein in their finances.
A staggering 62 per cent of small businesses surveyed by FSB said that they have experienced either an increase in late payments and/or had payments frozen completely as a direct result of the pandemic. The knock-on effect for small businesses has been crippling, with many being driven to the wall.
“From the start of the first lockdown, businesses have been trying to retain their cash for as long as they feasibly could to help mitigate the uncertainty around these unprecedented times,” says Mark Rankin, head of commercial services at Markel Law, which provides FSB’s Debt Recovery service.