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Fintech Q4 2021

Can fintech end our unseen business crisis?

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Martin McTague

Vice Chair, Federation of Small Businesses (FSB)

As small businesses adopt new finance platforms to meet fresh tax reporting requirements, there’s hope these tools could help end a £23 billion poor payment scourge.


Many of us are familiar with the challenges facing smaller firms following 18 months of on-again, off-again lockdowns – supply chain disruption, spiralling utility bills and surging employment costs being three of the more recognisable among them.

For a lot of small businesses, though, the biggest thorn in the side is one often overlooked. It stifles growth and serves as a source of daily anxiety. It existed before lockdowns but has been hugely exacerbated by them. Its name? Poor payment. 

Exceeding payment terms

As a UK supplier which dutifully delivers and issues invoices in good time, it’s sadly not unusual to be on the receiving end of payment terms far exceeding the 30 days stipulated by the Prompt Payment Code, invoice discounting to release funds, sudden changes to payment terms, or, in the most extreme cases, the absence of any payment at all.

Pay.UK has found that a quarter of small business owners worry about poor payment outside of work. The cost of this crisis is far greater than a hit to the bottom line.

Before the pandemic hit at the start of 2020, Pay.UK found that the sum owed in late payments stood at £23 billion, up more than 70% from the previous year.

Our research indicates that matters have worsened, with six in 10 small businesses reporting an increase in late payment, or a total freezing of payments, because of COVID-linked disruption.

Pay.UK has also found that a quarter of small business owners worry about poor payment outside of work. The cost of this crisis is far greater than a hit to the bottom line.

Fintech as empowerment

Thankfully, there is hope on the horizon. Smaller firms are now investing in new software to meet new Making Tax Digital reporting requirements. This is placing a strain on many – meaning increased costs at a time when cash reserves are low and inflationary pressure is growing.

On the upside though, this kind of software often includes invoice management tools – empowering firms to keep on top of when to issue, collect, charge interest on and chase what they’re rightfully owed.

Here at FSB, we’re equipping our members with the combination of fintech and legal support which is often required to keep payments coming in on time.

As we continue our campaign to bring the UK’s pernicious poor payment culture to an end, we have in fintech found a new way to tackle the scourge.

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