From understanding expenses to starting a limited company, our downloadable business guides can help you.
Britain’s small businesses are confident that leaving the European Union will not have a significant negative impact on one of their biggest problems – late payment by suppliers.
New research from payment organisation Bacs has found that the issue of overdue invoices continues to plague SMEs in this country. Bacs has found that almost half of all small companies in the UK are being paid late with the average debt now standing at over £32,000 per business.
However, more than four-fifths of the firms surveyed said that they did not expect Brexit to have any negative impact on late payments.
Bacs did find that companies were being compelled to take desperate measures as a result of the cashflow issues they faced. A third of firms that suffer from unpaid invoices have been forced to pay their own suppliers late, while one in eight admitted they had struggled to pay their own staff on time.
Around 20% said overdue invoices meant they couldn’t meet bills such as energy or business rates.
Almost a third of firms said they had extended their overdrafts to cope with cashflow problems, while a fifth of owner-managers said they had sacrificed their own salaries in order to keep cash in their businesses.
Bacs spokesman Mike Hutchinson said: “These figures clearly show the human cost that late payments have on SME business owners. Very large figures sometimes obscure the personal impact and sacrifice that many small to medium-size business owners have to bear in silence.
“Our figures show that a large proportion of SME directors have to use their overdrafts to supplement cash flow, with around 20% of small company directors paying themselves less in order to keep their businesses afloat.”
Hutchinson added that there were steps that firms could take to address the issue of late payment. “Adopting better invoicing practices and making payment terms absolutely explicit can help ease some of these pressures,” he said. “We would also urge businesses to look at automated payments like Direct Debit to help reduce the time and money they are spending to recover late payments due to them.”
Payment on account is not something that is widely known about among people who have never been part of the Self Assessment system. Learn more now!