London — 17 November, 2022 — As the Chancellor gets ready to deliver his Autumn Statement, Xero, the global small business platform, has released a four-point plan and recommendations for the UK Government to make significant changes to support small business recovery. This follows recently released Xero Small Business Insights data showing that late payments are costing small businesses £684 million a year.
Data from Xero’s Small Business Index underpins Small Business. Big opportunity, its newly released manifesto for change. It includes a four-point plan for recovery to ensure the nation’s resilient small businesses don’t get left behind.
With 894,000 UK small businesses and accounting and bookkeeping practices using its platform, Xero is providing recommendations to government and industry bodies to:
- Do more to help small businesses to thrive: A Small Business Minister should attend Cabinet and increase representation elsewhere to ensure their voice is heard.
- Tackle late payments once and for all: hold businesses to account through transparent reporting of what Xero believes is “unapproved debt”.
- Harness the power of hard working accountants and bookkeepers: bridge the skills gap and promote their crucial role in supporting small businesses.
- Equip firms with the right digital skills: write off digital tech investments to help small businesses move online or to remote operations.
Alex von Schirmeister, UK MD, Xero, said: “Small businesses remain a critical way to restore growth yet there are some obvious and easy things we could do to bring about change. It’s disappointing that late payments continue to take a toll on livelihoods and the mental health of so many. We can all work together to support faster payments to small businesses by firms of all sizes; have a collective voice for small businesses in government; and encourage more use of accountants and bookkeepers.
“Too often, the needs of small businesses are left behind. So ahead of today’s Autumn Statement, we are calling on policymakers to not forget about the nation’s incredible small businesses. Now has to be the time for stability.”
The extent of the problem
Xero’s latest Small Business Index, based on anonymised and aggregated data from hundreds of thousands of small businesses, shows that payments to small businesses were made on average 8.2 days late in September.
Small businesses also had to wait an average of 30.6 days to be paid by their customers – an increase of 0.6 days compared with August. This represents the longest payment times for two years, putting growing pressure on cash flow and their ability to pay staff and rising bills.
Additional analysis shows that the average UK small business currently faces cash flow crunches – where monthly expenses exceed revenues – for more than four months each year, with almost one in four (23%) experiencing a crunch for more than six months each year.
You can find a copy of the Small business. Big Opportunity report here.
