New SME product will reduce crippling late payments
19 July 2017
The Federation of Small Businesses (FSB) today launches a new debt management product for small businesses and the self-employed in a bid to help them avoid the devastating effects of late payments. In the majority of cases, small businesses that use it can expect to recover 100 per cent of the debt owed whilst not being charged any fees or commission.
About a third of payments to small businesses in the UK are late. Eradicating this would avoid 50,000 business deaths a year, growing the UK economy by £2.5 billion. The average value of a late payment owed to a small business is £6,142.
Dave Stallon, commercial director at FSB, says:
“Late payment has been a huge and debilitating problem for smaller businesses for too long. Whilst we persist in asking the Government to tackle the worst payment practices, we’ve now introduced this new product to empower small businesses to recover their debts in the most simple and effective way possible so they can focus on running their businesses.”
Users of the tool simply need to register online, load the debtor information and amount owed. A solicitor’s letter will then be sent on their behalf, giving a seven day deadline for receipt of payment.
In the vast majority of cases like these, a solicitor’s letter is all it takes to receive payment. In the unusual event that this doesn’t happen there are further steps that can be taken.
The impact of late payments on small businesses can be shattering. An FSB report shows that 37 per cent have run into cash flow difficulties, 30 per cent have been forced to use an overdraft and 20 per cent say late payment has hit profits. At the extreme end, cash flow difficulties have caused businesses to fail.