Pressure on for appointment of Small Business Commissioner to tackle late payment…
Birmingham-educated Anna Soubry, Minister for Small Business, has been urged to “put her skates on” to accelerate the appointment of a Small Business Commissioner that was proposed for creation within the Enterprise Bill introduced in September 2015.
Henry Briggs, Senior Partner at the Birmingham office of chartered accountants Haines Watts, said that the Minister, who graduated in law from the University of Birmingham, had pledged to ‘build the confidence and capabilities of small businesses to help them assert themselves in contractual disputes and negotiate more effectively’.
“However, seven months after the idea was first suggested in July and five months since the Enterprise Bill was introduced into parliament, there is still no news on this important and potentially ground breaking appointment,” said Mr Briggs.
“There are no national statistics that say how long it takes for businesses to get paid but anecdotal evidence indicates that many businesses continue to struggle with cash flow – particularly when they are supplying larger concerns – despite government pledges to deal with the issue, “said Mr Briggs whose comments follow the revelation that Tesco ‘knowingly delayed paying money to suppliers in order to improve its own financial position’.
“This creates undue stress for SMEs who either lack the funding to withstand such financial pressures or have to curtail their growth prospects because they don’t have sufficient cash to fund their ambitions.
“This is due to be a prime responsibility for the Small Business Commissioner – but it can’t be unless he or she is appointed.”
Mr Briggs’ is also recommending that an online database could enable the detection of patterns of recurring bad payers.
“The Commissioner should encourage smaller businesses to submit the amount of credit taken by their larger customers with good payers being praised and bad payers being exposed.
“Such a website would enable the Small Business Commissioner to demand better payment practices from offending businesses. Government could also give a lesson to poor paying companies – by suspending their government contracts.”
Research by BACS in 2014 said that 60% of SMEs experience late payment with the average business owed some £38,000. A third of businesses spend £500 each month as staff take time chasing late payments. One in four SMEs would be pushed into bankruptcy if their debt grew to £50,000. It is thought that the typical number of day’s credit taken by companies varies between sectors with some suffering more than others.
“The delay in the appointment of the Commissioner is simply exacerbating the problem,” said Mr Briggs.
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