- Late payment affects 81% of small businesses but 78% are in profit
- Personal guarantee insurance can provide peace of mind for small business owners
July 2023: In a new survey by Purbeck Personal Guarantee Insurance[i] 81% of small businesses report that they have been affected by the plague of late payment. A quarter of business owners say the constant frustration of late payment has got worse in the last year and 5% of small business owners said it is affecting their business significantly. However, 78% of the small businesses surveyed are currently turning a profit. While 1 in 5 (19%) are breaking-even and 44% are in the black by a small margin, over a third (34%) said they are making a good profit.
Purbeck’s findings come as the Federation for Small Businesses continues to lobby Government for greater measures to hold big businesses to account over the endemic problem of late payment[ii].
Despite government support with energy bill relief and the current Energy Bills Discount Scheme[iii], popular tactics amongst small business owners to help manage costs and cashflow have included reducing energy use and cutting staff pay rises, although only 7% of those surveyed has taken a pay cut themselves.
Comments Todd Davison, MD of Purbeck Personal Guarantee Insurance: “Working with small business leaders, it comes as no surprise that many continue to knock down seemingly insurmountable hurdles. When securing new finance, for example, many are now mitigating the risk of a personal guarantee backed loan through personal guarantee insurance. This is just one of a number of ways directors and owners are increasing their resilience.
“Whenever new finance is being considered it is sensible to prepare a personal guarantee request from the lender. Personal guarantee insurance helps ensure that the risk is not all on the shoulders of the business owners and directors, should the business fail. It’s one less worry at a time when small business owners have so many other issues to consider.”
[i] Survey conducted amongst 400 owners and managers of small businesses across the UK, 28th April 2023 via Maru/hub
[ii] https://www.fsb.org.uk/resources-page/time-is-money-late-payments-stifle-small-businesses-report-shows.html
[iii] https://www.gov.uk/guidance/energy-bills-discount-scheme
