FSB members joined the newly-created Small Business Commissioner Paul Uppal at Harborough Innovation centre on Monday to take part in a lively discussion on how the Commissioner can tackle the challenge of late payments for small businesses.
The FSB has long campaigned about the scourge of late payments, and the effect they have on the 5.7 million small businesses across the UK. Our ‘Big Voice’ member research report, ‘Time to Act- the economic impact of poor payment practices’ highlighted that 1 in 3 payments to small businesses are late, with 61% of those late payments coming from big businesses. The average value of each late payment stands at £6,142.
The report shows the negative impact of late payment and poor payment practices; 37% of small firms have run into cash flow difficulties, 30% have been forced to use an overdraft and 20% cite a slowdown in profit growth.
Sadly, 50,000 small businesses are forced to shut up shop due to late payments every year.
At the event in Harborough, the Commissioner presented the new website and team of case workers who will be available to support small businesses with under 50 employees to report a late paying business, anonymously if desired. Businesses may be signposted if a professional body exists which can help with their specific claim for certain industries or sectors, such as late payment due from public sector, construction or supermarkets.
A healthy and frank question and answer session covered FSBs top asks such as strengthening the Prompt Payment Code, effective use of ‘naming and shaming’, addressing the wider issue of supply chain bullying. Small businesses in the room shared examples of issues with late payments, which provided useful context for the Commissioner to use in his work.
The FSBs report includes a range of asks, but key is that we are calling on the Government to strengthen the Prompt Payment Code by making it mandatory for all FTSE 350 companies to sign up and to introduce a new “three strikes and you’re out” rule, which specifically targets repeat offenders of late payment.
All FSB members are now also entitled to a free Debt Recovery service as part of membership. This was brought into the FSB package in response to members’ need for professional support which could save them the time and cost of chasing themselves, which members often report is a key barrier to chasing outstanding payments. Find out more here
FSB has found that ending late payments could add £2.5Billion to our economy and help to close the productivity gap. Poor payment and supply chain bullying should be the focus of the Small Business Commissioner but he needs to be given the powers to be able to tackle it. We look forward to continuing to support this work from a local and national level to protect our small businesses from unfair, damaging payment practices.
The Small Business Commissioner website can be found here
FSBs ‘Big Voice’ member research report, ‘Time to Act- the economic impact of poor payment practices’ was published in November 2017 and can be found here
FSB members’ Free Debt Recovery service can be found here