Late payments and staff shortages put pressure on small firms Small businesses are under increasing pressure, with delays payments and staff shortages on the rise, according to research by accountancy software firm Xero. Analysis of half a million small firms has revealed an increase in late payments since the start of the year, with invoices settled 8.2 days beyond their payment terms. This marks an increase of 2.5 days since January and the biggest typical delay recorded since August 2020. The report also reveals that a surge in job creation in the first half of last year petered out in H2, while small firms employed 8.4% fewer people in February than in the same month two years ago. Xero’s analysis also shows that wage bills increased by 4.3% in February, with this coming on the back of surging inflation and a tight labour market. Despite pressures around payments and staffing, small firms registered a sales uptick in February, with an 8.8% increase when compared with the same month in 2020. Xero’s managing director, Alex von Schirmeister, said that while sustained sales growth is “an encouraging sign” for small businesses, “it doesn’t offset the other challenges they face.”