The Federation of Small Businesses (FSB) has published a new report showing that 62% of small businesses have seen an increase in late or frozen payments due to the COVID-19 pandemic.
The FSB is a not-for-profit organisation that offers small businesses advice, financial expertise, support and a voice heard in Government. Its new report titled ‘Late Again: How the Coronavirus Pandemic is Impacting Payment Terms for Small Firms’ followed a study of more than 4,000 small businesses.
The report also found that 10% of small businesses experienced payment terms being extended, which means a staggering 90% experienced late payments that weren’t signed off. The data was further analysed to show the impact on specific industries and a breakdown was given based on business to business (B2B) and business to public sector (B2PS). The study found the following percentages of businesses experienced an increase in late and/or frozen payments due to the coronavirus:
- 71% – small wholesale businesses
- 62% – small legal & accounting firms
- 62% – small advertising & market research companies
- 65% – B2B suppliers
- 63% – B2PS suppliers
The data also showed that 13% of B2B suppliers and 13% of B2PC suppliers saw an increase in payment terms from their customers.
The report contains an extensive list of recommendations by the FSB, including restricting Government support to those firms who pledge to pay small businesses within 30 days and giving the Small Business Commissioner additional powers to deal with repeat late payment offenders.
As we have reported on many occasions, late payments have always been a huge problem for small businesses and the coronavirus pandemic has only exacerbated the issue. Pay.UK’s latest data shows that at the end of last year, late payments had risen by 80% to £23.4bn.
Read the full report here: Late Again: How the Coronavirus Pandemic is Impacting Payment Terms for Small Firms Report