Business Owner Debt

High street banks have pledged to set up a £1.5 billion fund to provide investment for small businesses despite warnings that nearly 125,000 businesses are in financial distress

However, Scotland saw a modest rise in payment times beyond agreed terms, from 23.38 days in the second quarter of 2009 to 23.65 days for the same period this year, while late payments in the North West averaged 25.16 days to overtake London as the slowest paying region.

Balancing the books is a good thing for every business, and the Government is no different in this regard, but let us hope that the Chancellor has recognised the ripple effect that will ensue from public expenditure cutbacks, and the savings more than offset the costs to the country of business failures and consequent job losses’ impact upon the Benefits budget.

Treasury Exchequer Secretary David Gauke said a complex tax system created “uncertainty and instability”, sending the wrong signal to businesses wanting to invest in Britain.

The Insolvency Service has swung the axe on 50 front line official receiver investigators in a move which is “tantamount to legalising corporate theft”, according to sources.

The report estimates £69.5bn is owed to creditors from the 127,000 companies in financial difficulty in the second quarter.

The construction industry continues to be one of the worst affected sectors, with 555 UK businesses being declared insolvent during the second quarter. Manufacturing was the next worst hit with 421, with the retail sector in third with 342 businesses insolvent.

HM Revenue & Customs (HMRC) has issued a reminder to businesses affected by new online filing requirements for VAT returns.

Phil Cotter, managing director for credit services at Experian, UK & Ireland, said: “Predicting risk in consumer lending has become more complex, with accounts once correctly considered medium to low risk and profitable increasingly entering collections due to the changing economic climate.”

Huge backdated energy bills are hitting small businesses at a time when cash flow is increasingly tight.
Firms cannot rely on the same legal protection as individuals when it comes to fighting retrospective bills. If electricity suppliers get their meter readings wrong, individuals can be charged only up to 12 months retrospectively whereas bills for small businesses can be backdated for up to six years.
Even though energy regulator Ofgem brought in new rules on fair billing for small businesses earlier this year, it failed to protect those that have been under-billed and are hit with large payments.