Calls for less pressure on struggling small businesses

06/01/2011

The Federation of Small Businesses is calling upon local authorities and banks to give small businesses some more breathing space as cash flow continues to be a major problem for many.

HM Revenue & Customs said it would use a light touch when dealing with small firms that were struggling to pay tax and VAT bills on time. It said it would, "continue to offer a sympathetic ear to businesses."

Its 'Time to Pay' arrangements will continue to be offered to hard-up businesses. The Financial Services Authority also says that its members are often given six month extensions when they cannot pay up, and this may be increased to seven in some cases.

As a result of the cash flow problem affecting small companies, many are resorting to invoice factoring to get them through the hard times. Many business owners prefer to continue to pay their bills on time to avoid the piling-up effect that putting such payments off can create. In order to keep up with payments, they employ invoice factoring firms who immediately pay them the amount owed to them from various invoices that remain unpaid, in exchange for a percentage of the total amount.