Late Payment Brings Down SME Investment
29th May 2018.
The number of small firms planning to decrease investment has hit an 18-month high, according to new research from the Federation of Small Businesses (FSB).
Late payment is still causing trouble for UK businesses. Bad payment practices have been eating away at business confidence, and this has finally impeded on the strength of the country’s investment. According to the new data from FSB, UK business investment fell to £46.1 billion between the final quarter of 2017 and the first quarter of 2018.
The vulnerability of business finances has been exposed, and business owners have been forced to prioritise mere survival over expansion or investment opportunities. FSB reported that seven in ten small firms are not planning to increase investment over the next three months. Furthermore, one in seven are planning to decrease investment, the highest proportion since 2016.
The British business landscape is anything but smooth, with late payment landmines threatening to trip up UK businesses. Some owners have abandoned their expansion plans to accommodate late payers within budgets, and some have even surrendered to Company Voluntary Arrangements (CVA) or even complete insolvency. Here at the Credit Protection Association, we stress the presence of alternatives. Our debt recovery and credit management services not only provide our members with a lifeline but afford them a whole new lease on life.
The research from the FSB further revealed that almost two-thirds say they are operating below capacity, while more than seven in ten report a rise in operating costs this quarter. The figure is up 10 percentage points compared to the same period in 2016 and is close to the record-high proportion recorded six months ago
FSB National Chairman Mike Cherry said: “It’s hard for small firms to invest when £14 billion is being withheld from them due to late payments. If all of your working capital is tied up in invoices, then clearly you won’t have the cash needed to invest for the future. Following the collapse of Carillion, big corporations need to realise that late payments aren’t a smart move, they’re a threat to our economy.
“Last month saw thousands of small firms hit by increases in minimum wage rates, auto-enrolment contributions and business rates. Meanwhile, inflation remains well above the government’s two percent target. Small businesses are seeing margins squeezed, leaving less to invest in the technology, training and research they need to increase productivity.
“The incentives to invest are there but they’re not being accessed by the small firms that really need them. More than half of small firms haven’t even heard of R&D tax credits, for example, and bigger firms tend to be better at completing the complex process of applying for them.
“On top of all this we still don’t have a clear sense of what our future relationship with Europe looks like, making it harder to invest for the years ahead.”
Since Britain’s decision to leave the European Union, its position within the world’s economies has started to weaken. Once an impressive superpower, the image of the UK has been misshapen and disfigured. As a result, UK businesses need to make an extra effort to build a competitive edge and keep the UK as an economy worthy of trade.
There are very powerful alternative options, ones which not only do not involve insolvency practitioners but involve pursuing those expansion opportunities long neglected. At the Credit Protection Association, the collaboration between our debt recovery and credit management services provide our members with the monetary incentive to grow their potential, while also inputting the correct credit checks and status reports to ensure this new financial strength is protected.
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
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