London Daily

Focus on the big picture.
Thursday, Sep 04, 2025

UK’s late payment ‘crisis’ risks future of 440,000 small firms

UK’s late payment ‘crisis’ risks future of 440,000 small firms

Federation of Small Businesses urges ministers to improve payment issue that has long dogged the sector
More than 440,000 small firms could be forced out of business by the late payment “crisis”, according to the Federation of Small Businesses, which has called for urgent government intervention to improve the way firms are paid.

Almost a third of small businesses (30%) surveyed told the FSB that they had seen the late payment of invoices increase over the last three months, with at least 8% warning that the problem has become so bad that it was threatening the viability of their business.

For years the problem of late payments – often by big FTSE firms – has dogged the small business sector. Firms are often forced to pay their suppliers, wages and other bills on time, but face long waits to be paid themselves.

The FSB said more than 400,000 small firms have shut down since the start of the pandemic for various reasons, and that the future of a similar number is now threatened by this problem alone.

“Late payment was destroying thousands of small businesses even before the pandemic hit – the pandemic has made matters worse,” said the FSB national chair, Mike Cherry. “In the past, the government has rightly identified greater board accountability as key to spurring change in this area, but delivery has been slow.”

Cherry said small firms, which employ more than 13 million workers in the UK, are facing battles on almost every front, including new customs checks on imports from the EU and a looming energy cost crisis.

“Today, it’s a fresh wave of admin for importers and exporters – in three months’ time it will be a hike to the jobs tax, that is national insurance contributions, a rise in dividend taxation, business rates bills and an increase in the national living wage. On top of that, operating costs are surging – many will soon be trying to strike energy deals without the clout of big corporates or the protections afforded to consumers.”

The FSB has said every big business and government organisation should be abiding by the prompt payment code arguing that 30-day payment terms should be “the norm for those who are committed to environmental, social and governance best practice”.

It wants every big UK corporation to have a non-executive director on its board with direct responsibility for payment culture.

The other findings of the FSB survey of more than 1,200 members will concern ministers. 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, accommodation and food industries, as many UK consumers adopted self-imposed lockdowns in the face of Omicron.

Pictures of deserted high streets in the run-up to Christmas, fears over spiralling energy costs and concerns that staff will not be able return to work on Tuesday have not helped matters. Spiralling energy bills have already forced some firms to close. Businesses are not protected by the price cap imposed by the regulator Ofgem.

Companies importing goods from the EU also now face new, onerous paperwork. Regulations require businesses (in most cases those receiving goods in the UK, but in some those sending them to the UK) to notify the customs authorities of precisely what is being sent to Great Britain from the EU, and from where. The rules were in effect waived throughout 2021 but now apply for the first time.

A government spokesperson said: “The government is making significant reforms to help small businesses get paid on time, including halving the payment period in the prompt payment code and consulting on fines and other new powers for the Small Business Commissioner.”

“There is plenty of support available to ensure small businesses are well positioned to comply with UK border processes, including one-to-one advice through the Export Support Service.”
Newsletter

Related Articles

0:00
0:00
Close
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Queen Camilla’s Teenage Courage: Fended Off Attempted Assault on London Train, New Biography Reveals
Scottish Brothers Set Record in Historic Pacific Row
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Court of Appeal Allows Asylum Seekers to Remain at Essex Hotel Amid Local Tax Boycott Threats
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
Nvidia Reveals: Two Mystery Customers Account for About 40% of Revenue
Woody Allen: "I Would Be Happy to Direct Trump Again in a Film"
Pickles are the latest craze among Generation Z in the United States.
Deadline Day Delivers Record £125m Isak Move and Donnarumma to City
Nestlé Removes CEO Laurent Freixe Following Undisclosed Relationship with Subordinate
Giuliani Seriously Injured in Accident – Trump to Award Him the Presidential Medal of Freedom
EU is getting aggressive: Four AfD Candidates Die Unexpectedly Ahead of North Rhine-Westphalia Local Elections
Lula and Putin Hold Strategic BRICS Discussions Ahead of Trump–Putin Summit
WhatsApp is rolling out a feature that looks a lot like Telegram.
Investigations Reveal Rise in ‘Sex-for-Rent’ Listings Across Canada Exploiting Vulnerable Tenants
Chinese and Indian Leaders Pursue Amity Amid Global Shifts
European Union Plans for Ukraine Deployment
ECB Warns Against Inflation Complacency
Concerns Over North Cyprus Casino Development
Shipping Companies Look Beyond Chinese Finance
Rural Exodus Fueling European Wildfires
China Hosts Major Security Meeting
Chinese Police Successfully Recover Family's Savings from Livestream Purchases
Germany Marks a Decade Since Migrant Wave with Divisions, Success Stories, and Political Shifts
Liverpool Defeat Arsenal 1–0 with Szoboszlai Free-Kick to Stay Top of Premier League
Prince Harry and King Charles to Meet in First Reunion After 20 Months
Chinese Stock Market Rally Fueled by Domestic Investors
×