Even though there has been a Small Business Commissioner since end 2017 in the UK, according to the Federation of Small Businesses - as many of 80% of small businesses are still paid late. To attack this problem, in his Spring Statement UK Chancellor Philip Hammond announced that big companies will need to review and report on how they’re paying their suppliers in their annual accounts. Companies will need a designated board member to be responsible for ensuring that the company pays on time.
This initiate has been welcome by the FSB: “For too long, small businesses have struggled with poor payment practice. Everyone deserves to be paid on time,.” says FSB National Chair.
Previse’s warning: need for enforcement
Paul Christensen, CEO of fintech Previse which works on speeding up supplier payments has two major concerns:
- Need for enforcement:
- Transparency will only get businesses so far – we already have the prompt payment data after all – the fact remains that speeding up payment processes is very manually intensive and expensive. This is especially true for SME suppliers which can’t afford some of the technology which large buyers use to automate parts of the invoice process. That means businesses are going to need to really prioritise the issue if they are to make the necessary change. If these measures are not backed up by some sort of enforcement, there won’t be much real change
- Data masks the true impact for the smallest suppliers:
- The way payments are currently reported masks the situation for small businesses (which we know from our data get paid much more slowly than larger firms) – if this persists with the new audited data, it’s possible that businesses will lull themselves into complacency, thinking they are addressing the issue while their smaller suppliers continue to suffer.
How to really piss SMEs off
See CTMfile’s Checklist on “How to really piss your suppliers off with your payment terms, procedures and systems” which has been viewed many 1000s of times, for details of how to achieve complete success with your suppliers: they stop doing business with you because the hassle just isn’t worth it.
CTMfile take: Late payments really matter: they create inefficiencies and bad will. Prompt payments create efficiency and goodwill.
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