A recent survey of 500 business owners has highlighted the late payment of invoices as one of the biggest barriers for survival. A quarter of those surveyed feared that they would go out of business within the next five years.

The research was carried out by Xero, the small business invoicing platform, as part of the ‘Business Rewired’ report. The report investigates the future of small businesses in the UK and what they see as the biggest concerns.

The findings of the survey show that UK SMEs are struggling in the current economic climate and that they have serious worries about future growth. The main concern that small business owners raised in the survey was the issue of the late payment of invoices. More than half (54%) highlighted this as a problem for their company.

The other key worries for the SMEs questioned were tax rates (44%); Brexit (44%); maintaining or increasing productivity levels (31%); cyber attacks (27%); and the cost of recruitment (19%).

There were also concerns for SME owners around the increasing cost of commercial rents, retaining staff, annual leave, the rising costs of importing materials and goods and the costs of creating a more sustainable business.

For even the most seasoned of small business owners, this economic period is the hardest one they have been through. 40% of those questioned for the report said that it was the most turbulent time they’d experienced.


Mental health concerns

One of the other issues highlighted by the survey of SMEs is the effect running a business can have on their mental wellbeing. Over a third of those who responded said that the pressures of being a business owner had had an impact on their mental health.

Those running their own business worked on average an additional nine hours a week over their standard hours.

In order to keep their business operating through any cashflow problems, owners are having to use their own personal funds. On average, they have put £11,846 into their businesses. This is often because their customers are paying invoices late and they need the financial injection to ensure their own bills are paid on time.


The future of SMEs

The ‘Business Rewired’ report continues by looking at the future of the UK small business sector. It sees technology forming a more crucial part as we move forward into the next decade.

The business futurist and contributor of the report, Gerd Leonard, commented: “Humanity will change more in the next 20 years than in the previous 300.

“We will see the biggest technological transformation in human history – impacting where, how and why we work. Automation is reducing the need for humans to undertake routine tasks and the world of work is heading towards a dramatic reset.

“Everything we assume about work, jobs, training and education is being challenged by exponential scientific and technological progress. Whether you’re a small business owner, an accountant, bookkeeper or advisor, these emerging trends will affect you very soon.”


Payment technology

Gary Turner, MD and co-founder of Xero, believes that technology will have a greater influence on payment cultures in the future. With the increase in the use of instant payment methods, there will be a decline in payment terms, which will benefit small businesses.

“The ways small businesses work now are dramatically different from the 1980s when the first personal computers arrived. But business needs to adapt to greater changes coming their way.

“New technologies will hasten a far greater consciousness towards the biggest killer of small businesses.

“Cash flow problems will decline as instant payment technologies take root as a cultural norm. I believe what we’ll see is 30-day payment terms going the way of the fax machine.”


The problem of late payment

When you’re a small business that has clients who pay their invoices late, it can cause serious problems for your cashflow. A lack of regular funds makes it harder for you to grow your business, can have issues for the payment of suppliers and staff and, in the most severe of circumstances, can cause a company to go out of business.

Before the problem of late payments gets out of hand, it’s essential that SMEs take control of the situation and manage their customers’ payments. At CEA Limited we can handle all your commercial debt recovery requirements – from issuing letters before action through to court action and enforcement.

No matter how large the debt is, if you have clients who have overdue invoices contact our team today to start the business debt collection process.