News in brief: hiring, late payments, skills gap, pensions

News in brief
News in brief

UK SMEs recruiting the wrong executive level staff

Small to medium sized businesses across the UK are missing out on crucial funding opportunities due to the wrong individuals filling board level positions, according to executive search and interim management firm, Intramezzo.

The report revealed that due to a lack of good existing talent, over a quarter of respondents (32.5% of venture capital investors and 21% of corporate venture capital investors) always or frequently feel the need to replace existing CEOs.

It also found that the quality and strength of the leadership team is a top factor in decisions to invest in portfolio companies, with 85% of respondents stating that they are unlikely or highly unlikely to back a company that lacked the right skills.

Intramezzo chief executive Dermot Hill stated: “The makeup of the executive board is crucial to the success of any organisation, but more so for start-ups and high-growth businesses, where they do not yet necessarily have a proven business model or high-levels of revenue.

“Ambitious start-ups need a CEO in place who has the potential to be a leader of a £100m business, not just a £1m business. Thinking more strategically about identifying the talent that is needed as the business grows is key to achieving this.”

Late payments to UK SMEs rise to £500bn

British SMEs are owed more than £500bn in outstanding invoices, an increase of more than 70% in two years, according to the latest Lloyds Bank research.

The problem is likely to get worse during 2016, with almost a third (30%) of small businesses expecting more of their customers to demand deferred payment terms in the next six months, the research found.

UK SMEs also own almost £2.5trillion of assets that could be used to fund further growth, again a huge 220% increase on 2014, when Lloyds Bank found that small and medium-sized businesses owned a total of £770bn in assets.

Lloyds has suggested that the figures show a lack of understanding of alternative funding options holding British businesses back.

Commenting on the figures, CEO and co-founder of Capitalise Paul Surtees said: "While more must be done to create a supportive operating environment that protects our small businesses from late payments, alternative finance options are making the picture less bleak. Products such as invoice finance, merchant cash advance and bridging loans are all growing in popularity and trust.

“However, it should not just be the savvy few that take advantage of online finance marketplaces offering these solutions. We believe in access to finance for all British businesses. Banks, alternative lenders and fintech firms must all do more to ensure small business finance products are clear, accessible and more widely understood."

UK faces chronic skills shortage

The modest economic growth of the past four years in the UK has been met by an unprecedented shortage of skills, leaving thousands of vacancies unfilled, according to the UK Commission for Employment and Skills.

Despite a surge in job openings, the number of positions left vacant because employers cannot find people with the skills or knowledge to fill them has risen by 130% since 2011.

Although most sectors are suffering from skills shortages, the situation is particularly acute for some. Over a third of vacancies in electricity, gas and water and construction are now due to skills shortages, with transport and manufacturing not far behind. Only in public administration are skills shortages below 10%.

The research finds that:

  • the financial services sector has seen the sharpest rise in skills shortages, rising from 10% in 2013 to 21% in 2015
  • time management is a significant issue, with nearly 60% of establishments who reported a skills gap saying that their staff lacked the ability to manage their own time and prioritise tasks
  • across the UK, two million workers are under-utilised – that is, they have skills and experience which are not being used in their current job

Pensions Regulator confirms many SMEs still not enrolling staff

The Pensions Regulator has announced that it issued 2,596 warning letters in Q4 2015 to businesses that have not yet enrolled their employees in a government pension.

Accountants have expressed concern that SMEs are not heeding the warnings to get their employees enrolled in time for the auto-enrolment deadline, often due to confusion or a lack of understanding.

Intuit QuickBooks MD and VP Europe Rich Preece said: “We’ve found that 40% of micro-businesses are completely unaware of the costs that can be associated with auto-enrolment, only 33% are able to accurately describe the legislation and 65% don’t know their businesses’ staging date.

“Given that small businesses are often the most vulnerable, it’s vital they take the necessary steps to avoid fines while also preparing their finances for the hike in pension contributions that are only going to increase.”