Late or slow payment a threat to small business survival

• Food & Beverage & Retail sectors top the league table of worst performers.
• Late payment culture is rife across sectors that include Automotive, Technology, Media & Entertainment, Chemicals and Manufacturing
• Payment practices are improving in Construction sector.

Good Business Pays today published its analysis of more than 70 companies with the some of the worst payment performance.

Analysing data from over 5,000 companies, Good Business Pays identified::

• The Late Payers: Who report paying more than 50% of their invoices later than agreed terms.
• The Slow Payers: Who report an average time to pay of more than 80 days.
• The Late & Slow Payers: Who report taking more than 80 days to pay their invoices and pay more than 50% of invoices later than agreed terms.

Terry Corby, CEO of Good Business Pays said: “Supply, energy and now financial challenges have created a perfect storm for small businesses. While these pressures face all organisations they are felt most, and fastest, by small businesses. Our findings show some of the UK’s largest companies from a range of sectors taking more than three months to pay their suppliers and we think this is unacceptable. That’s why it is entirely appropriate that the government last month launched a consultation on payment practices, performance regulations and a statutory review of the role of the Small Business Commissioner.”

The list shows some of the UKs largest companies from the Food & Beverage sector, including AB InBev, Birds Eye, H J Heinz, Coca-Cola, United Biscuits, Walkers Snacks and Mondelez Confectionery. Examples from other sectors include NTT and Telefonica in the Technology sector, and Arriva Rail North in the Transport sector.

Responding to the report AB-InBev/Budweiser Brewing Group said: “We work with our suppliers on an individual basis, negotiating a number of terms, including payment terms, that suit both parties in the long-term. Our average time to pay an invoice is driven by large businesses making up 79% of invoices over the H2 2022 reporting period. Our average payment figure relates largely to these suppliers. We are especially focused on ensuring reasonable payment terms for the small businesses we work with, and 97% of our Small and Micro suppliers have payment terms below 60 days and were paid within those payment terms in 2022. We look forward to continuing to update on progress in this area.”

In 2022 the Federation of Small Businesses predicted that 400,000 would fail due to cashflow problems.

Tina McKenzie, Policy Chair at the Federation of Small Businesses, said: “We welcome Good Business Pays shining a light on boardroom practices. It’s clear that too many of the UK’s big businesses continue to fail to look after their suppliers. The Boards of companies with poor payment practices should take a long hard look at themselves and take the action needed to improve their performance, not only for the sake of their suppliers but also for their own brand reputation and corporate citizenship. Their Audit Committees should look into payment practices, using the quarterly prompt payment data to challenge management, and assure that progress is being made.”

As consumers face a once-in-a-lifetime cost of living crisis, small businesses are wrestling with a trilogy of challenges which Good Business Pays says in unsustainable. Large organisations in ‘cash conservation’ mode means many SMEs are living from hand to mouth and waiting too long to be paid for materials, transport, labour, and suppliers for work done months before. Coupled with rising food and energy costs, as well as consumer demand for ESG-compatible supply chains, and post-Brexit logistics and labour disruption, Good Business Pays says small entities face their most critical year.

Liz Barclay, the UK Small Business Commissioner said about the report: “I am hugely disappointed when presented with data that shows bigger customers aren’t doing the right thing by their smaller suppliers. It’s not difficult to understand their need to be paid quickly. The soaring cost of doing of doing business has left many smaller firms struggling to pay their bills. Having to wait inordinate lengths of time to be paid money that is rightfully theirs, leads to business failure, job losses, mental health problems and worse. Please, please will Boards of these firms scrutinise payment processes and, for the good of your own business, pay your suppliers quicker, on fair payment terms and by the agreed date if not sooner. “

Data used in Good Business Pays ‘Late & Slow Payers’ list is from information provided by companies under The Payment Practices and Performance Regulations (2017) which required large companies and Limited Liability Partnerships (LLP) to publish 6-monthly updates on their payment terms and conditions.

In compiling its report, Good Business Pays categorises companies into three categories:

• Late payers – those who report paying more than 50% of invoices later than agreed terms.
• Slow payers – which report an average time to pay of more than 80 days.
• Late and slow payers – those that report an average time to pay of more than 80 days and payment of more than 50% of their invoices later than agreed terms.

-72% of UK businesses still don’t view the PSTN Switch Off as a high priority-

-Staggering 42% of businesses weren’t aware of the Switch Off at all-

-Failure to act leaves UK SMBs open to disruption-

Nearly three quarters (72%) of UK SMBs still don’t consider the PSTN Switch Off a high business priority despite being warned about the impact of failing to switchover before the 2025 deadline. This is according to data from the ‘Switch Off Hesitancy’* survey commissioned by Spitfire Network Services Ltd, a provider of telecoms and IP engineering solutions.

The survey of 400 UK-based SMBs also revealed a staggering 42% of businesses aren’t aware of the Switch Off, and the impact delaying a switch to IP could have on their business operations.

The ‘Switch Off Hesitancy’ survey sought to better understand the plans of business leaders for the Switch Off, which relates to the end of all legacy analogue and ISDN telephone networks in the UK. With the 2025 deadline fast approaching, business leaders have been warned about how a lack of action or delay in making the switchover could cause major disruption to their business operations.

Dom Norton, Sales Director, Spitfire Network Services Ltd, commented: “It has been very interesting to understand where SMBs are regarding the Switch Off – their thoughts, plans and reasoning behind their actions. We have really been engaging with customers and prospects to offer guidance around the Switch Off because we know the impact inaction could have. Businesses could quite literally be cut off. To see that a significant number of business leaders are yet to consider the Switch Off as a high priority is concerning. Clearly more needs to be done to make leaders aware of their need to act.”

“There is no escaping the fact that the SMB sector appears to be ignoring the rather large telecoms elephant in the room – the analogue and ISDN Switch-Off, 2025,” commented Harry Bowlby, Managing Director, Spitfire Network Services Ltd. “Our advice is don’t let the Switch-Off creep up on you and leave your business exposed – make the smart move and get the ball rolling today.”

• The SME finance gap is growing; 82% of brokers report a reduced appetite from the major banks to fund SMEs, whilst a similar proportion (79%) predict that demand for small business finance will rise in the next year.
• More than eight in ten brokers (84%) report their SME clients are concerned about their businesses surviving increased energy prices; over 50% think a potential recession will be worse for small businesses than the pandemic was.
• The findings come after iwoca extends its funding line with long-term partner Pollen Street Capital, from £125m to £170m, to match increasing SME demand for finance.

Demand for finance from the UK’s 5.5m small and medium-sized businesses is on the rise at the same time as banks are reducing their lending appetite, according to iwoca’s latest SME Expert Index. 

More than eight in ten SME finance brokers (82%) agree that major banks have reduced their appetite to fund SMEs, while nearly half of brokers (49%) report that more of their clients’ applications for finance were rejected compared to the previous month.

The new data of UK brokers who submitted over 2,000 SME finance applications in December also finds that funding experts think current macroeconomic pressures will have a worse impact on SMEs than the pandemic did.

SME demand for finance soars as banks retrench

The findings suggest demand for lending is set to increase dramatically over the next six months; four in every five brokers (79%) believe that demand for SME finance will rise, with just 6% predicting demand will fall. 

Four in ten brokers (39%) say they’ve already seen a rise in applications for finance over the last month, with just one in seven brokers (14%) seeing applications fall.

Current macroeconomic pressures set to have worse impact on SMEs than the pandemic did, brokers say

One of the key drivers of rising demand for SME finance is the soaring cost of doing business. More than eight in ten brokers (84%) report their SME clients are concerned about their businesses surviving increased energy prices. 

Over half (51%) also expect the potential recession’s impact on SMEs will be worse than that of the pandemic, twice the rate of those who think it will be better. 

iwoca increases funding line to match demand

iwoca recently extended its funding line from £125m to £170m with long-term partner Pollen Street Capital. The company will use the additional £45m to provide loans to meet the growing demand for SME financing, having seen a 50% increase in the number of businesses it funded across the UK and Germany in 2022.

Colin Goldstein, Commercial Growth Director at iwoca, said: “With brokers predicting that the impact of current macroeconomic pressures this year will be worse than the pandemic for small businesses, it’s clear that SMEs across the UK are in need of financial support. And – as our data shows – traditional banks just aren’t offering this.  

“Alternative lenders are once again proving just how crucial they are to protecting small businesses from this financial shock. Our funding extension with Pollen Street Capital has helped us match increased appetite for SME finance, and now our focus will be to secure further financing so we can continue to  service this rising demand.”

SME Expert Index

This SME Expert Index from iwoca provides a snapshot on what’s driving small business owners to borrow, the trends seen in the types and value of finance being accessed, and how these patterns change as the country navigates economic shifts in the market. iwoca publishes this index every quarter to capture the experience of brokers working with small businesses. 

iwoca is reaching 2.3 million businesses across the UK and Germany through its embedded lending technology, which allows businesses to access loans through a range of platforms such as accountancy software apps and digital neo-banks. As well as its original Flexi-Loan, the lender offers an omni-channel B2B payment solution (with built in B2B BNPL) – iwocaPay, and a Revenue Based Loan, where repayments are a percentage of a business’s monthly sales. The company offers free mental health support for all small businesses in the UK, in partnership with online therapy platform Spill.

• ‘Naughty Nibbles’, ‘Love at First Bite’ and ‘She’s Sew Lovely’ amongst the UK’s sauciest business names
• A fifth (18%) of the UK’s sauciest small businesses operate in the food and drink industry
• Research found that two thirds of people say they’d be more likely to notice a small business with a funny name
• Insurance provider Simply Business will give £2,500 to winner of public vote for best business name

This Valentine’s Day, home baking business ‘Naughty Nibbles’, light metal fabrication company, ‘Smelt my Heart’ and dressmaker ‘She’s Sew Lovely’ have been revealed as some of the UK’s sauciest small business names. 

That’s according to new analysis from Simply Business, one of the UK’s largest insurance providers, who reviewed over a thousand small business names to reveal the nation’s sauciest small businesses.  

The food and drink industry was also confirmed as the sector with the sauciest names with almost a fifth (18%) of small businesses analysed operating in this group. Other saucy sectors include High Street stores (8%) and Hair & Beauty small business owners (7%). 

Research from Simply Business revealed that a witty or funny business name can play a huge part in helping small businesses succeed, with two thirds (64%) of people saying they would be more likely to notice a small or local business with a funny or witty name. Moreover, a third (28%) say they’d be more likely to shop at a small or local business with a funny or witty name compared to those without. 

The ‘Top 10 Saucy Business Names’ include: 

To celebrate the ingenuity of small businesses across the UK, Simply Business has launched its inaugural competition to crown one lucky small business with the title of ‘Britain’s Best Small Business Name’. Small businesses can now enter the competition, with the best entries making it onto a Top 10 shortlist. The British public will then vote to crown the champion, with the winner receiving a ‘Britain’s Best Small Business Name’ trophy and £2,500 cash prize.

The competition has been relaunched alongside the company’s “You name it. We insure it” campaign, which features some of the punniest names in UK small business including:

• Pane in the Glass – window and door repairs firm in Norfolk
• Get Stuffed – takeaway restaurant in Shadwell, London 
• Curl Up and Dye – hairdressing salon in Kingston, South London 
• Rough Around The Hedges – mobile gardener in Elmbridge, Surrey

Alan Thomas, UK CEO at Simply Business said “Valentine’s Day is about celebrating what we love, and for many small business owners there is nothing more special to them than their business. The impact that a memorable business name can have on your business is incredible – our research showed that people really warm to small businesses who have shown their personality and flare through an imaginative name. 

“We’re really excited that, with the relaunch of our ‘You Name It. We Insure It.’ campaign, we can give a UK SME a cash boost, and celebrate the creativity and personality of small businesses across the UK.”

Applicants can submit an entry to be crowned ‘Britain’s Best Small Business Name’, here: https://get.simplybusiness.co.uk/you-name-it-we-insure-it/ 

Deadline for entries is 20th February 2023. The shortlist of top 10 entries will be revealed on the 24th February 2023 with the winner announced in March.