By Jennifer Thomas
Federation of Small Businesses
FSB recently launched a new debt management product for small businesses and the self-employed, in a bid to help them avoid the devastating effects of late payments.
FSB Debt Recovery gives FSB members the opportunity to recover 100 per cent of the money they are owed – and in most cases this costs absolutely nothing. You can even decide if you want to charge late payment charges on the amounts that are outstanding.
About a third of payments to small businesses in the UK are late. Eradicating this would avoid around 50,000 business deaths a year and grow the UK economy by £2.5 billion. The average value of a late payment owed to small businesses is £6,142.
Late payment has been a huge and debilitating problem for smaller businesses for too long. Whilst we persist in asking the Government to tackle the worst payment practices, we’ve introduced this new product to empower small businesses and the self-employed to recover their debts in the most simple and effective way possible so they can focus on running and growing their businesses.
FSB Debt Recovery provides a complete debt recovery solution. This includes commercial and consumer debt, and whether the debtor is based in the UK or overseas. The service is available no matter what size of debt is owed. With FSB Business Essentials membership, members can have up to 20 legal letters per year issued, at no extra cost. Users of the tool simply need to register online, load the debtor information and amount owed. A solicitor’s letter will then be sent on their behalf, giving a seven-day deadline for receipt of payment.
In the vast majority of cases like these, a solicitor’s letter is all it takes to receive payment. In the unusual event that this doesn’t happen there are further steps that can be taken.
The impact of late payments on small businesses can be shattering. An FSB report (Time to Act: the economic impact of poor payment practices) shows that 37 per cent have run into cash flow difficulties, 30 per cent have been forced to use an overdraft and 20 per cent say late payment has hit profits. At the extreme end, cash flow difficulties have caused businesses to fail.
As the UK’s biggest business support group, FSB’s focus is both on successfully lobbying Government to make important policy decisions, whilst offering effective tools, advice and benefits that have a positive impact on the day-to-day lives of small business owners and the self-employed.
To find out more go to www.fsb.org.uk/benefits