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Establishing a successful recruitment process and clear written employment contracts for new employees can have a major impact on your business.

Every business needs to be aware of its obligations under minimum wage and equal pay laws, as well as recent pensions auto-enrolment changes.

You must comply with legal restrictions on employees' working hours and time off, or risk claims, enforcement action and even prosecution.

The right employment policies are an essential part of effective staff management. Make sure any policy is clear and well communicated to employees.

While sick employees need to be treated fairly, you need to ensure that 'sickness' is not being used as cover for unauthorised absence.

Most pregnant employees are entitled to maternity leave and maternity pay, while new fathers are entitled to paternity leave and paternity pay.

As well as undermining morale, illegal discrimination can lead to workplace grievances. Employee discrimination is covered by the Equality Act 2010.

Home, remote and lone workers are becoming increasingly commonplace. Key issues include communication and how to manage and motivate people remotely.

The right approach to consulting with and providing information to your employees can improve employee motivation and performance.

Disciplinary and grievance issues can be a major burden to employers. Putting in place and following the right procedures is essential.

Following the right dismissal and redundancy procedures helps protect your business and minimise the risk of a legal dispute at tribunal.

Employment tribunal claims are a worrying prospect for any employer. A tribunal case is a no-win situation – even if the claim is unjustified.

UK small businesses owed £32.1bn in late payments

18 July 2023

New research reveals that almost half of all invoices issued by sole traders and small firms were paid late in the past year, leaving many business owners struggling with cash flow.

Two new studies have highlighted the damage that late payments are doing to small businesses in the UK. A survey of over 1,000 SMEs by insurer Simply Business has found that UK small businesses are owed £32.1bn in late payments, with many planning to use personal savings to prop up their business while nearly a third of businesses are seeking bank loans.

Meanwhile, a new study by cloud accounting software company FreeAgent has found that 43% of all invoices sent by UK freelancers and small businesses in the past year (June 2022 - June 2023) were paid late. This represents a slight improvement since 2020, when 46% of UK invoices were paid late.

Businesses in jeopardy

Roan Lavery, ceo and co-founder of FreeAgent, said: "While it's certainly positive to see a slight drop in the level of late payment compared to 2020, it remains the case that around half of invoices are still not being paid on time. That represents a huge number of SME owners and freelancers whose businesses are unnecessarily being put in jeopardy.

"The vast majority of small businesses simply don't have the luxury of being able to absorb late payments into their accounts - they need to get paid promptly to keep themselves afloat … In our current volatile economic climate, and with business owners continuing to feel the impact of high inflation, interest rates and the cost of living crisis, it is more important than ever for them to be protected."

How to tackle the late payment crisis

A separate survey of small business owners by FreeAgent has identified some of the potential legislative solutions that SMEs would like to see implemented to tackle late payment in the UK:

  • Better access to legal aid and services (41% of respondents);
  • Harsher financial penalties for late payers (38%);
  • Mandating the Prompt Payment Code for all private sector contracts (34%);
  • An official star rating scheme to show how quickly companies pay their clients (31%).

In addition, 25% of business owners surveyed said they would like to see the government create a new, dedicated fund to protect small businesses from late or non-payers.

SME profits to fall in 2023

The latest SME Insights Report, published by Simply Business, has found that late payment is just one of several serious challenges facing small businesses:

  • 48% of SME owners say the rising cost of living is the biggest challenge;
  • 63% say that rising taxes, interest rates and inflation are eating into profit margins;
  • 26% of SMEs are now spending up to 40% more on energy each month compared to the previous year;
  • 52% of SMEs anticipate a decrease in profits by up to 20% in 2023, with customer retention (26%) and lack of funding (25%) cited as factors affecting business.

Worryingly, 26% of small business owners in the UK say that they may be forced to cease trading if the outlook for their business does not improve. However, 54% of businesses remain optimistic that the UK economy will improve this year, and SME confidence continues to grow as 77% express confidence about their business prospects over the next six months.

Written by Rachel Miller.

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