The Federation of Small Business (FSB), UK organization that represents small and medium-sized businesses, has reportedly called for urgent intervention by the government in improving the way firms are paid, as over 440,000 firms are under the risk of shutting down due to the late payment of invoices.
In a survey conducted by the FSB, almost a third of small firms have reported to have seen an increase in late payments over the past three months, while at least 8 percent have warned that the viability of their businesses would be threatened if the problem continues.
With often large FTSE firms being responsible the phenomenon, small business sectors have been plagued by the late payment crisis for years, where they have had to pay their suppliers, wages, and other bills on time but had to wait for a long time for their pay.
Mike Cherry, National Chairman of FSB, stated that the late payment issue had been destroying thousands of small businesses even before the pandemic had begun.
According to Cherry, small firms employ more than 13 million workers in the country and are now facing difficulties on every front, such as new customs checks on EU imports and the ongoing energy cost crisis.
From the FSB survey, it has also been revealed that these firms are also expecting their performance to worsen in the coming months instead of improving, especially in the retail, food, and accommodation industry as many UK consumers are undergoing self-imposed lockdown due to the spread of Omicron.
FSB has asked that every big business and government organization should be abiding by a prompt payment code and have a 30-day payment term as the norm for better environmental, social, and governance practices.
A government spokesperson responded that the authorities are bringing significant reforms in aiding small businesses to help them get paid on time, like halving the payment period in the prompt payment code. It is also consulting on fines and other new powers for the Small Business Commissioner.