One in three small businesses will struggle after March

The credit agency analysed the finances of 1.16 million small businesses, forecasting 30% of these will become “at heightened risk” – meaning they may not have enough cash to absorb the energy price shock - once the current price cap ends. This would more than double the percentage that are currently ‘at heightened risk’, standing at just 13%. 

For this, the business looked at cash balances, as well as credit and debit turnover records using data from the Commercial Credit Data Sharing scheme.   

Experian’s managing director of information services James McGarva said: “Businesses need to prepare for the April energy shock by building their financial foundations.  

“Practice good cash flow management, understand the factors influencing your credit score, and give energy suppliers sufficient notice if you think you’ll struggle to make payments. The future looks daunting, but there are steps that can be taken to improve financial resilience.” 

Liz Barclay, the government’s Small Business Commissioner, added: “These figures are very worrying. An added threat to the viability of small businesses is that many are struggling to get paid quickly by their bigger customers.  

“If bigger firms are holding onto cash in case they need it for business critical expenditure, small suppliers can struggle to manage their cashflow and pay their energy and other bills while waiting. If energy bills go up again that could break the business. We need bigger customers to pay smaller suppliers as a priority to give them a fighting chance of survival.” 

Experian’s analysis also found that although invoice payments over 30 days late has actually reduced by 11% year on year, sectors including retail, accommodation, and food has worsened.