How many small businesses are chasing late-payments?
11% of UK SME employers applied for finance in the last 12 months. 37% of those did so for “working capital or cash flow reasons” (FSB, Time is Money, 2023).
Businesses aren’t applying for finance to facilitate growth, rather to stay operational in the first place.
The largest contributing factor is still the cost of doing business - particularly the hike in energy bills and overheads.
Government Energy Subsidising Will End
Although the closing date for the Government’s energy price-cap has been delayed multiple times, it will inevitably end. More permanent solutions must be devised to reduce the burden on small businesses.
With Spring turning to Summer, heating bills will be reduced, however for many industries this doesn’t reduce the energy they consume by a whole lot. There are other, larger uses of energy inflating their costs.
For example, STEM industry organisations often have facilities and environments which must be kept at a controlled temperature at all times; Manufacturing firms alike require a high volume of electricity to use their tools and equipment. These are just two examples of how hardship could continue for certain industries.
Collective Reactions
The Federation of Small Businesses recently called for Energy Providers to finally hold out an olive-branch to their SME customers. General consensus among the small business community is that providers are ramping up prices to protect them from customers going bankrupt, leading to unreasonable demands for payment in advance.
Recommendations made by the FSB include halting the demands for large, up-front payments which could ultimately put thousands of small organisations out of business, in favour of a “time to pay scheme”, a payment plan structure that echoes tactics already employed by HMRC.
One particularly interesting recommendation, made towards the Small Business Commissioner (SBC), is to provide consequences for consistently poor payment practices - excluding these firms from public procurement, and reinstating a “name and shame process” through proactive investigations.
Currently, the SBC does not have the correct powers to address these issues.
Examine Your Situation
Everything starts by looking at your sales ledger.
It’s often difficult for a business owner to deal with recovering payments directly whilst protecting their relationship with the client; especially if it’s becoming a frequent occurrence. At other times, missed payments go unnoticed, meaning that invoices have likely long-since been forgotten about. This is extremely common, and fixable.
Seeking professional Debt Recovery services is often the best option in these cases. It may seem intimidating at first, but the key is to partner with a firm whose ethos and conduct match your own standards.
XFS Limited is one such professional firm. We offer said Debt Recovery services, along with on-going Sales Ledger Management, and other outsourced offerings. With this, you enjoy the peace of mind to focus on the rest of your business.
Within our team, there is a mountain of experience in the Financial Services industry. Their guidance and support throughout the recovery process is second to none, in which, when desired, they can advise and mentor you to have better oversight of the cash flow pipeline through your business.
We speak directly to that 37% of businesses out there - we already know you need our help. Let us convince you that XFS is the right partner for cash flow challenges.
☎️ 0141 483 3345 🌐 www.xfslimited.co.uk 📧 info@xcelfinancialsolutions.co.uk 🔔 @xfslimited