The Government must do more to tackle the issue of late payment in the New Year if it wants to see real economic growth.
That was our message in a letter to Mark Prisk – the Government Business Minister – this week. Several other leading organisations also put their name to it – Lloyds TSB, the NFU, and the Institute of Credit management among them.
And the message was clear: unless the Government forms a plan of action to tackle what our members tell us is a growing problem for SMEs, the viability of businesses to grow in 2012, will, at best be stifled, or, at worst, spell the end for many.
We want the Government to provide a detailed plan addressing this issue. If it doesn’t, it seems likely that the Government’s small business friendly policies, however well meaning, will have a limited impact and small firms will continue to struggle to control cash flow, create jobs and drive economic growth.
In the simplest of terms, late payment forces firms out of business, and the scale of the problem is evidenced anecdotally by small business owners who regularly report it as a major drain on their finances.
Equally of concern is the reluctance of many of these business owners to come forward and publicly identify the companies that routinely fail to pay them on time and in full, or who change payment terms and conditions retrospectively with little or no consultation with their suppliers.
We urge firms to come forward and tell us so we can name them in our ‘late payers’ hall of shame. New additions would have fine company, joining the likes of Dell, Carlsberg, United Biscuits – the company behind the McVities brand – Argos, construction company Rok, and various other household names.
Often, the reason for this reluctance to challenge is fear – fear of losing business with a large company. It is the same reason many suppliers do not pursue late payers in the courts.
The Forum has pointed to various pieces of research which shows later payment continues to be experienced by many small firms, and remains a widespread issue that is if anything a growing threat to SMEs rather than a diminishing one. So it’s not even as if the problem is going away.
New data from commercial credit reference agency, Graydon UK – who were happy to put their name to the Forum’s letter to Mark Prisk – showed 51% of businesses surveyed were in agreement that late payment has become worse during the past year. A further 45% said it may threaten their ability to invest in their businesses, while of more concern though, a fifth said it could prevent them from trading.
It is time to tackle the problem once and for all. SMEs should not have to be bullied by larger multi-nationals. Prompt payment should be the norm, no excuses, no exceptions.
We would urge anyone subjected to this kind of treatment to tell us about it – we’re not afraid to take these companies on.
If you support the work we are doing to tackle the problem of late payment, join the Get Britain Trading campaign. Get Britain Trading aims to make running a business simpler and more profitable and one of the key areas is late payment. Show your support by joining the campaign at www.getbritaintrading.co.uk
