Despite the news that the UK economy is out of recession, it seems that small businesses are not out of the woods.

I’ve been running my business for nearly 13 years, and this is the first time that we’ve experienced such a considerable amount of bad debt.

We have clients going into administration (and then just buying themselves back in order to cancel millions of pounds of debt), businesses in crisis mode unable (or unwilling) to pay their invoices, people not honouring contract lengths and companies burying their heads in the ground to avoid having to pay money they owe.

I ask myself, is this a crisis of conscience or a financial crisis? 

We can’t deny that companies are suffering from price rises and the cost of living crisis. Raw materials have gone up in price, and salaries need to rise to match the housing and food cost increases. 

(Image: Cheryl Luzet)

The impact on a small business for late or non-payment can be lethal, and compounds the problems of price rises.

Poor cash flow can destroy an otherwise healthy business, making it impossible to pay bills and staff on time. In hard times, large companies hold onto their cash, which flows down to smaller businesses already on the brink of survival. 

The small claims court is one solution, but it is slow and extremely time consuming, meaning business owners are spending their time filling in forms or attending mediation sessions, instead of investing time in growing and developing their companies. 

Late payment is known to be a key barrier to growth - destroying productivity and forcing companies to act in a much more cautious way when investing in their businesses.  

SMEs make up the largest proportion of businesses in the UK and form an important part of the business supply chain.

Action is needed to ensure that they get paid promptly, freeing up time to allow business owners to focus on activities that promote growth.

Improving payment culture in the UK is no easy task, and is clearly not going to happen without improved legislation.

With the general election round the corner, political parties have the perfect opportunity to put forward plans to support the small business market, leading to a brighter economic future.