A survey by the Federation of Small Businesses has found that almost one in ten UK firms say the late payment crisis is threatening their survival and it predicts that as many as 440,000 businesses could close their doors in the coming year
The Federation of Small Businesses (FSB) has warned that late payments, high inflation and mounting admin for firms that trade internationally will cause the UK small business community to shrink in size if left unaddressed.
The latest FSB Small Business Index (SBI) has found that the UK's late payment problem has worsened over the past year and it predicts that as many as 440,000 businesses could be forced to close in 2022 due to late payment alone. It comes after an estimated 400,000 small businesses closed their doors in 2021.
The new FSB study of more than 1,200 business owners has found that:
The headline UK SBI measure of confidence dropped to -8.5 in Q4. The figure has fallen every quarter over 2021, having stood at +27.3 in Q1. More small firms now expect their performance to worsen over the coming three months than expect an improvement. Pessimism is especially pronounced in the retail (-40.3) and accommodation and food (-33.0) industries.
Businesses that trade with the EU are also now dealing with the introduction of full import checks and rules of origin requirements; the FSB findings show that 74% of small exporting firms said international sales were already flat or falling over the past quarter.
Small firms face a fresh wave of admin for importers and exporters. April will see a rise in national insurance contributions, dividend taxation, business rates bills and an increase in the national living wage.
The FSB is urging the government to do more on late payment. Any small firm that is experiencing difficulties because of late payments can contact the Small Business Commissioner for advice and support.
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