The Federation of Small Businesses (FSB) has warned that a worsening of the late payment crisis will cause further contraction across the small business sector, unless policymakers take action to tackle the problem.

Research recently conducted by the FSB found that 30% of all business owners have seen late payment of invoices increase over the last three months. In addition, a further 8% said they have experienced other forms of poor payment practice.

Worryingly, the survey also revealed that late payment is currently threatening the viability of around 8% of the small business community. Government statistics show that the number of UK small firms fell by almost 400,000 last year, and the FSB survey suggests the late payment crisis could be set to force a further 440,000 firms out of business in 2022.

Commenting on the research findings, FSB National Chair Mike Cherry said, “Late payment was destroying thousands of small businesses even before the pandemic hit – the pandemic has made matters worse. Policymakers need to understand that late payment is the issue that keeps thousands of entrepreneurs up at night and one that has worsened in lockstep with lockdowns. We need to see words turned to action.”